- Investor optimism is attributed to rising foreign exchange reserves.
- The banking sector continues its upward momentum, closing up 1.8%.
- The government’s unwavering commitment to reforms has also boosted confidence.
Stocks remained in high gear on Thursday, continuing their forays into uncharted territory, buoyed by fading political uncertainty and a brighter economic outlook, with a subdued inflation outlook reinforcing optimism about a sharp reduction in rate by the central bank in December.
The benchmark KSE-100 Shares Index of the Pakistan Stock Exchange (PSX) gained 1,274.55 points, or 1.27 percent, to close at 101,357.32 points, after hitting an intraday high of 101,496, 17 points.
Topline Securities, in its market wrapper, attributed investor optimism to the news that the State Bank of Pakistan (SBP) received $500 million from the Asian Development Bank (ADB) under a loan for the government’s Climate Change and Disaster Resilience Program (CDREP).
This disbursement should help the SBP end November 2024 with reserves around the $12 billion mark.
“The banking sector continued its upward momentum, closing up 1.8%. The removal of the minimum deposit rate (MDR) requirement for corporate deposits continues to drive investor interest in the sector” , the brokerage said in its report.
In terms of value traded, Pakistan Petroleum Limited (PPL) led the market with Rs 1.93 billion, followed by Pakistan State Oil (PSO) with Rs 1.88 billion, The Searle Company (SEARL) with 1.63 billion rupees, Oil and Gas. Development Company Limited (OGDC) with Rs 1.53 billion and Attock Refinery Limited (ATRL) with Rs 1.29 billion.
The main contributors to the index were PPL, Service Industries Limited (SRVI), Bank Alfalah Limited (BAFL), Engro Corporation (ENGRO) and SEARL, which together contributed 400 points to the index’s rise.
Bank of Punjab (BOP) led the market in volume, with 95 million shares traded, according to the Topline report.
Analysts have attributed this bright streak to several factors, including the government’s unwavering commitment to implementing reforms.
The index crossed the 100,000 point mark for the first time in history on Thursday, reflecting a 60% gain since the start of the year, driven by a 47% combination of capital gains and 13% dividend yield.
Policy efforts to turn fiscal and external accounts into surpluses and reduce the cost of doing business have helped boost investor confidence, analysts say. They added that falling yields and lower inflation expectations are also boosting the market.
The Finance Division, in its monthly Economic Update and Outlook, forecasts that inflation will slow to 5.8%-6.8% in November and then to 5.6%-6.5% in December.
“Inflation is expected (…) to fall further to 5.6% – 6.5% by December 2024,” indicates the report published on Wednesday.
The central bank cut interest rates by 250 basis points in early November in a bid to revive a sluggish economy amid a sharp decline in the inflation rate.