- Investors booked profits after a strong annual rally.
- The November 24 protest call and security unrest have hurt sentiment.
- Cement, banking and power sectors are witnessing buying activity.
Stocks saw wild swings Wednesday, ending a prolonged rally fueled by economic optimism as investors shifted into risk-averse mode, taking profits in an overbought market, amid renewed political noise following the call for protest from the main opposition party on November 24.
The Pakistan Stock Exchange (PSX) stock benchmark KSE-100 index declined to 95,546.45 points, down 310.21 points or 0.32 percent, from the previous close of 95,856, 66, after reaching a daily high of 96,711.33 points.
While the rally reflects widespread optimism, a market correction emerged by midday.
Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities, attributed the downtrend to prevailing political and economic instability, saying: “Stocks are bearish due to political uncertainty and security unrest in the country. Rupee instability, foreign capital outflows and the expected IMF board decision on the government’s alternative mini-budget draws triggered the bearish activity.
Market sentiment may have been dampened by increased political noise, including a planned November 24 protest by an opposition party, and heightened security concerns due to militancy.
Samiullah Tariq, Head of Research and Development at Pakistan Kuwait Investment Company (Private) Limited, commented: “The market is undergoing a correction today as it has increased significantly over the year. »
Market dynamics are supported by strong performances in key sectors such as technology, banking and energy, as well as policy clarity and optimism regarding economic recovery.
Sectors such as cement, banking, fertilizers, oil and gas exploration, oil marketing and power generation remained in the limelight.
Notable gains were recorded by highly indexed names such as K-Electric, Pakistan State Oil, Shell, Oil and Gas Development Company, Pakistan Petroleum, Mari Petroleum, Meezan Bank, National Bank of Pakistan and Habib Bank.
Factors supporting the recovery are falling inflation, a 32% year-on-year rise in foreign direct investment (FDI) to $904 million between July and October and a current account surplus of $349 million for October 2024.
The State Bank of Pakistan (SBP) said October marked the third consecutive monthly current account surplus, thanks to an increase of 7% month-on-month and 24% year-on-year. the other is remittances.
Foreign exchange reserves also reached their highest level in two years, with projections surpassing $11 billion in the coming weeks.
Inflationary trends have further strengthened investor confidence. The November Consumer Price Index (CPI) is expected to fall between 4.5% and 5%, marking a historic decline: for the first time in 78 months, inflation is expected to fall below 5%. For FY25, inflation is expected to average around 7.5%.
The technology sector led the recovery, supported by a significant increase in export remittances from the information and communications technology (ICT) sector. Remittances jumped 34.9% year-on-year to $1.206 billion between July and October 2024, with October alone seeing a 38.6% increase to $330 million.
On Tuesday, the KSE-100 Index hit an all-time high of 96,036 points during intraday trading, before closing at 95,857 with a record gain of 860.99 points (0.91%).