PSX Surges as Year-End Approaches: Investor Optimism and Economic Indicators Drive Rally
KARACHI: The Pakistan Stock Exchange (PSX) witnessed a significant surge on Monday as the year-end approached. The KSE-100 index skyrocketed by 3,908 points, or 3.5%, reflecting investor optimism and positive economic indicators.
Investor Optimism Fuels Market Rally
Potential Rate Cuts and Economic Reforms
Investor sentiment was buoyed by the possibility of a single-digit policy rate and expectations of rationalized government spending coupled with ongoing economic reforms. The finance minister’s hints at these changes played a critical role in bolstering market confidence.
Strong Rupee and Export Growth
A strengthening rupee, rising export figures, and falling lending rates further fueled the bullish trend. These factors combined to create an environment of optimism among investors, leading to a substantial increase in trading volumes and overall market value.
Market Performance Overview
KSE-100 Index Soars
The KSE-100 index reached an intra-day high of 4,071 points before settling at 115,259. This impressive performance pushed the index to the upper end of its current range, marking a significant milestone for the PSX.
Trading Volumes and Value
Trading volumes surged to over 1 billion shares, with the total value amounting to Rs41 billion. Ahsan Mehanti of Arif Habib Corp noted that the market exhibited a massive surge ahead of the year-end, driven by broad-based activity and positive investor sentiment.
Key Contributors to the Rally
Major Index Movers
Significant contributors to the index’s rise included HBL, Dawood Hercules Corporation, MCB Bank, Engro Corporation, and Mari Petroleum, which collectively added 1,265 points. These companies played a pivotal role in driving the market upwards.
Sector-Wise Performance
The performance across various sectors was robust, with the financial and industrial sectors showing particularly strong gains. This widespread positivity indicated a broad-based rally, further enhancing market confidence.
Economic Indicators and Policy Changes
Revised Tax Structure for Banks
The federal cabinet approved an ordinance revising the tax structure for banks. This policy change eliminated the ADR-related tax on income from government securities while raising the corporate tax rate for banks. These adjustments were aimed at creating a more balanced and fair tax environment for the banking sector.
Economic Growth Figures
The National Accounts Committee released economic growth numbers for the first quarter of fiscal year 2024-25 and revised rates for FY24. The growth rate for 1QFY25 stood at 0.92% year-on-year, while the FY24 growth rate was slightly revised downward to 2.50% from 2.52%.
Market Analysts’ Insights
JS Global Analyst’s View
JS Global analyst Muhammad Hasan Ather attributed the KSE-100’s surge to investors’ anticipation of an imminent drop in interest rates to single digits. This expectation, coupled with year-end portfolio rebalancing and futures rollover of approximately Rs55 billion, drove the market upwards.
Arif Habib Limited’s Report
Arif Habib Limited (AHL) noted that the week started on a strong note, with significant gains in the KSE-100 index. The market’s upward momentum was supported by investor optimism surrounding anticipated equity fund allocations by local institutions ahead of the new year.
Daily Trading Highlights
Volume Leaders
Cnergyico PK led the trading volumes with 125.6 million shares, gaining Rs0.92 to close at Rs7.44. It was followed by WorldCall Telecom, with trading in 111.5 million shares, and The Bank of Punjab, with 84.2 million shares.
Foreign Investors’ Activity
Despite the positive local sentiment, foreign investors sold shares worth Rs178.5 million, according to the National Clearing Company of Pakistan.
FAQs
What factors contributed to the recent surge in the PSX?
The surge was primarily driven by investor optimism regarding potential single-digit policy rates, rationalized government spending, and continuous economic reforms. A strong rupee, rising exports, and falling lending rates also played significant roles.
How did the KSE-100 index perform on Monday?
The KSE-100 index soared by 3,908 points, reaching an intra-day high of 4,071 points before settling at 115,259. This marked a 3.5% increase.
Which sectors showed the most significant gains?
The financial and industrial sectors exhibited particularly strong gains, contributing significantly to the overall market rally.
What policy changes were approved by the federal cabinet?
The federal cabinet approved an ordinance revising the tax structure for banks, eliminating the ADR-related tax on income from government securities and raising the corporate tax rate for banks.
How did foreign investors react to the market surge?
Foreign investors sold shares worth Rs178.5 million, despite the overall positive sentiment in the local market.
