PSX Hits New High as KSE-100 Index Breaches 94,000 Barrier

The Pakistan Stock Exchange (PSX) witnessed a robust start to the week, with the benchmark KSE-100 Index reaching a record high on Monday, reflecting investor confidence and positive market trends.

Market Surge and Record High

During intra-day trading, the KSE-100 Index surged by 526 points or 0.59% at 11 am, briefly crossing the 94,000-point level. By the close of the market, the index stood at 93,648.32 points, having hit an all-time high of 94,020.02 points during the day. This marked an increase of 356.64 points or 0.38% from the previous week’s close.

Factors Behind the Rally

State Bank of Pakistan’s Policy Rate Cut

The significant gains in the market, particularly the 2,400-point increase observed during the previous week, were largely driven by the State Bank of Pakistan’s (SBP) decision to lower its policy rate by 2.5 percentage points. Market analysts interpreted this rate cut as a positive signal for liquidity and economic stability, bolstering investor confidence.

Government Sukuk Auction

In addition to the SBP’s rate cut, the government’s Sukuk auction also played a crucial role in the market rally. The auction raised a substantial amount, with yields across all tenors contracting, underscoring continued investor appetite for government-backed securities.

Economic Indicators

On the economic front, several positive indicators contributed to the bullish market sentiment:

• Workers’ remittances grew to $3.1 billion.
• The SBP’s foreign exchange reserves increased by $18 million to $11.17 billion.

Historic Rally

On Friday, the market witnessed a historic rally, with stocks soaring past the 93,000 mark for the first time ever. This rally was fueled by rising global equities and falling local lending rates. The benchmark KSE-100 index closed at 93,292 points, marking a robust increase of 2,432 points or 2.7% week-on-week (WoW).

Analysts’ Reviews

JS Global Deputy Head of Research

Muhammad Waqas Ghani, Deputy Head of Research at JS Global, noted that the stock market remained bullish during the outgoing week, closing at 93,292 points, an increase of 2.7% WoW. He highlighted that average trading volumes increased by 31% to 735 million shares.

AHL Research

AHL Research also reported a stellar performance throughout the week, with the KSE-100 index reaching an all-time high of 93,292 points. The market momentum was driven by the SBP’s historic 250-basis-point cut in the policy rate.

MSCI Frontier Markets Small Cap Index

Another positive development was the addition of eight Pakistani companies to the MSCI Frontier Markets Small Cap Index. This move was expected to attract global investors and accelerate foreign fund inflows.

Government and Economic News

Income Tax Collection

Despite the market rally, the Federal Board of Revenue (FBR) data indicated a shortfall in income tax collection during the first four months of FY25.

IMF Talks

The government was preparing to finalize its strategy for talks with the International Monetary Fund (IMF) staff mission from November 11 to 15.

Saudi Agreements

Prime Minister Shehbaz Sharif sent a special delegation to Saudi Arabia to finalize $2.8 billion worth of agreements signed recently by the two countries.

Remittances Growth

According to SBP data, remittances for October 2024 reached $3.05 billion, marking a 24% increase compared to the same period last year.

Sector-Wise Performance

The following sectors were the top contributors to the market’s positive performance:

• Fertilizer: Contributed 505 points.
• Cement: Contributed 404 points.
• Power Generation and Distribution: Contributed 376 points.
• Oil and Gas Exploration Companies: Contributed 320 points.
• Automobile Assemblers: Contributed 288 points.

Foreign Selling

Despite the overall positive market sentiment, foreign selling was witnessed during the week under review, amounting to $4.65 million compared to net buying of $1.97 million last week.

FAQs

1. What caused the KSE-100 Index to reach a record high?

The record high was primarily driven by the State Bank of Pakistan’s decision to cut its policy rate by 2.5 percentage points, alongside positive economic indicators such as increased remittances and foreign exchange reserves.

2. How did the government Sukuk auction affect the market?

The government Sukuk auction raised significant funds with contracting yields across all tenors, indicating strong investor confidence in government-backed securities, which positively influenced the market.

3. What role did the MSCI Frontier Markets Small Cap Index play?

The addition of eight Pakistani companies to the MSCI Frontier Markets Small Cap Index was expected to attract global investors and boost foreign fund inflows, contributing to the market’s positive performance.

4. How did the SBP’s foreign exchange reserves impact the market?

An increase in the SBP’s foreign exchange reserves by $18 million to $11.17 billion signaled economic stability, boosting investor confidence and positively affecting the market.

5. What sectors contributed the most to the market’s performance?

The fertilizer, cement, power generation and distribution, oil and gas exploration companies, and automobile assemblers sectors were the top contributors to the market’s positive performance.

Conclusion

The Pakistan Stock Exchange (PSX) has demonstrated remarkable resilience and growth, setting new records and attracting significant investor interest. The combined impact of the SBP’s rate cut, government Sukuk auction, positive economic indicators, and strategic additions to the MSCI Frontier Markets Small Cap Index have all contributed to this robust market performance. As the market continues to evolve, these factors will likely play a crucial role in shaping its future trajectory.

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