Bullish Run: Pakistan Stock Exchange Hits All-Time High on Pre-Budget Optimism
The Pakistan Stock Exchange (PSX) roared to an all-time high this week, breaching the historic 73,000 barrier in a pre-budget rally. This surge was fueled by a confluence of positive factors, including robust data on remittances, rising foreign currency reserves, and speculation surrounding negotiations with the International Monetary Fund (IMF) for a new loan program.
Early Fluctuations Give Way to Upward Trajectory
While the trading day began on a positive note with the KSE-100 index climbing steadily, it soon dipped to an intra-day low of 72,876.83 points. This initial volatility did not dampen investor sentiment, and the market quickly recovered. The index remained firmly in the green zone for the remainder of the trading session despite fluctuations throughout the day.
Key Drivers of the Rally
The upward momentum stemmed from several key factors:
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Stability of the Pakistani Rupee: The Pakistani rupee exhibited stability, backed by rising foreign exchange reserves exceeding $9.12 billion. This instilled confidence in investors and bolstered the overall market sentiment.
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Expectation of Renewed IMF Deal:
Speculation regarding ongoing negotiations with the IMF for a new and potentially larger loan program fueled optimism among investors, anticipating positive outcomes for the Pakistani economy.
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Cement Sector Soars on Infrastructure Plans:
The government’s ambitious target of increasing the Public Sector Development Program (PSDP) by 27% to Rs1.2 trillion for the fiscal year 2025 (FY25) significantly boosted the cement sector. Investors, anticipating increased demand for construction materials, flocked to cement companies, driving their share prices up.
Record-Breaking Close for the PSX
The combined effect of these positive developments propelled the market to an intra-day high of 73,449.37 points. Despite some selling pressure in the afternoon session that eroded some of the gains, the PSX managed to close above the 73,000 mark, etching a historic milestone as its highest closing index ever.
Market Experts Weigh In
Market analysts attributed the rally to a confluence of positive data and developments. Ahsan Mehanti, MD of Arif Habib Corp, highlighted the role of strong remittance figures, with April 2024 recording a 28% year-on-year increase to $2.81 billion. Additionally, he emphasized the impact of government infrastructure plans, rupee stability, and IMF loan negotiations on the record-breaking close.
Further Insights from Market Reports
Topline Securities, in their report, noted the initial range-bound activity during the trading session, followed by a rally that emerged as the day progressed. They attributed this positivity to the recent decline in the weekly Sensitive Price Indicator (SPI) for the fourth consecutive week, indicating a potential slowdown in inflation. They also highlighted the strong performance of the cement and steel sectors, with both closing significantly higher than their previous levels.
A Week of Gains Across Sectors
Arif Habib Limited (AHL) reported a positive week for the KSE-100 index, with a gain of 1.5%. Notably, the cement and pharmaceutical sectors witnessed exceptional growth. Companies like Lucky Cement, DG Khan Cement, and Pioneer Cement were major contributors to the index gains. AHL further observed a significant surge in all cement stocks on Friday, propelling the KSE-100 beyond the previous week’s high.
Trading Activity and Foreign Investment
Overall trading volumes increased significantly compared to the previous day, with 741.2 million shares traded compared to 674.98 million on Thursday. The total value of shares traded reached Rs25.3 billion, indicating a healthy level of investor participation. Notably, foreign investors remained net buyers of shares worth Rs84.2 million during the trading session.
Looking Ahead: Sustainable Growth and Market Performance
The Pakistan Stock Exchange’s historic closing above 73,000 marks a significant milestone for the Pakistani economy. While pre-budget optimism and positive news undoubtedly fueled this rally, the long-term sustainability of this growth hinges on several factors. Continued stability in the rupee, successful conclusion of IMF negotiations, and effective implementation of government infrastructure plans will all play crucial roles in shaping the future performance of the PSX.
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