PSX Soars on Rate Cut Optimism
KSE-100 Index Jumps 1,867 Points to 116,169.41 as Investor Confidence Strengthens
KARACHI: The Pakistan Stock Exchange (PSX) experienced a remarkable surge on Monday, driven by bullish market sentiment and investor optimism. Stocks across various sectors rallied as investors anticipated a significant rate cut by the State Bank of Pakistan (SBP), spurred by low inflation and a decrease in short-term government bond yields nearing 11.99%.
Market Sentiment and Investor Optimism
The upward momentum at PSX was further supported by strong buying activity from local institutions in key sectors, including autos, E&Ps, and refineries. Additionally, the anticipation of the upcoming monetary policy review, alongside easing political noise, upbeat economic indicators, and favorable trade balances, played a crucial role in the record surge at PSX.
Key Drivers of the Surge
Ahsan Mehanti of Arif Habib Corp commented that stocks were bullish, led by scrips across the board as investors expected a significant SBP rate cut amid thin inflation and a cut in short-term government bond yields near 11.99%. He added that easing political noise, resolve over IPP contracts, and upbeat economic indicators for trade balances, FX reserves, and remittances played a catalyst role in the record surge at PSX.
KSE-100 Index Performance
At the end of trading, the benchmark KSE-100 index recorded a surge of 1,867.61 points, or 1.63%, to 116,169.41.
Institutional Buying and Market Review
Topline Securities commented in its market review that the market continued its strong upward momentum, extending its record-breaking rally as investors anticipated the upcoming monetary policy review scheduled for today. This was further bolstered by significant buying activity from local institutions, with the index hitting an intraday peak of 116,682.
Key Contributors to the Index Rise
Topline noted that the rise in the index was primarily driven by strong performances from Mari Petroleum, Fauji Fertiliser Company, Pakistan Petroleum Ltd, Oil and Gas Development Company, and The Hub Power Company, which collectively contributed 1,749 points.
Trading Activity
Trading activity remained lively, with a total volume of 1,469 million shares and a turnover of Rs66 billion. WorldCall Telecom led the volume charts, with 403 million shares traded during the session.
Market Report Insights
Arif Habib Limited (AHL) stated in its report that the KSE-100 index saw new highs for all benchmarks, gaining 1.6%. Forty-eight shares rose while 51 fell, with Mari Petroleum (+9.94%), Fauji Fertiliser Company (+5.18%), and Oil and Gas Development Company (+4.64%) having the biggest index contributions. UBL (-1.34%), Lucky Cement (-1.48%), and MCB (-1.48%) were the biggest index drags.
Future Market Indicators
AHL mentioned that the first indication with regards to waning index momentum would be a divergence between the key benchmark indices, with one failing to make a new high. Currently, such a situation hasn’t arisen. For now, the key index benchmarks are all making new highs in unison, and the path of least resistance remains to the upside.
Analyst Commentary
JS Global Analyst Muhammad Hasan Ather commented that the KSE-100 index soared in anticipation of a major policy rate cut. Key sectors such as Autos, E&Ps, and Refineries saw strong buying momentum. Investor confidence ahead of the SBP’s Monetary Policy Committee meeting suggests a positive long-term outlook, signaling growth potential for the stock market. Ather noted that the equity market is expected to maintain its positive momentum, supported by rate cuts driving capital flows from fixed income to equities, likely resulting in further re-rating of the market.
Stock Performance Summary
Shares of 477 companies were traded. Of these, 246 stocks closed higher, 194 fell, and 37 remained unchanged.
Volume Leaders
WorldCall Telecom was the volume leader, with trading in 403.2 million shares, gaining Rs0.13 to close at Rs1.92. It was followed by Cnergyico PK, with trading in 59.5 million shares, gaining Rs0.11 to close at Rs7.12, and Pak Refinery, with 54.7 million shares, gaining Rs2.72 to close at Rs36.52.
Foreign Investment Activity
During the day, foreign investors sold shares worth Rs473.2 million, the NCCPL reported.
FAQs
What factors contributed to the surge in the KSE-100 index?
The surge in the KSE-100 index was driven by investor optimism for a significant rate cut by the State Bank of Pakistan (SBP), supported by low inflation, a decrease in short-term government bond yields, and strong buying activity from local institutions.
Which sectors saw the most significant buying activity?
The autos, E&Ps, and refineries sectors saw the most significant buying activity during the surge in the KSE-100 index.
What were the key performances driving the index rise?
Key performances driving the index rise included strong performances from Mari Petroleum, Fauji Fertiliser Company, Pakistan Petroleum Ltd, Oil and Gas Development Company, and The Hub Power Company.
How did foreign investors participate in the market?
Foreign investors sold shares worth Rs473.2 million during the trading session.
What is the future outlook for the PSX?
The equity market is expected to maintain its positive momentum, supported by anticipated rate cuts driving capital flows from fixed income to equities, likely resulting in further re-rating of the market.
