Stocks on Wednesday surged to a new record high above 87,000 points, mainly driven by renewed economic optimism, particularly strong current account and foreign direct investment figures, alongside positive GDP growth forecasts from the International Monetary Fund (IMF).
After reaching an intraday high of 87,309.22 points, the Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Shares Index rose by 727.96 points, closing at 87,194 points, compared to 86,466 points on Tuesday.
Heavy buying was witnessed in blue chips from automobile assemblers, cement, chemicals, commercial banks, oil and gas exploration companies, oil marketing companies (OMCs), and refineries.
Analyst Samiullah Tariq from Arif Habib Limited stated that investors took cues from decreasing yields on fixed-income government securities, indicating potential future lower interest rates.
Lately, the one-year Treasury Bill (T-Bill) and three-year Pakistan Investment Bond (PIB) rates have been trading near 13% and 12%, respectively — attributed to an increased demand for fixed-income securities, resulting in capital appreciation.
“Strong corporate results are also propelling the market,” added Tariq.
The first quarter (1QFY2024) corporate earnings season is unfolding with forecasts of strapping payouts/dividends, propelling bullish investors to enter the right sectors.
The capital market is riding a bullish wave set in motion by the passage of the 26th Amendment with index heavyweights, speculated to offer attractive payouts, remaining key drivers during the earnings season amid hopes for stability, especially after improved economic data.
The government, which remained engaged in intense lobbying to amend the constitution through the parliament for weeks, finally succeeded in clipping the powers of the superior judiciary to appoint its chief justice.
The constitutional changes were approved in an extraordinary session of parliament which was assembled on Sunday, a public holiday, and ran all night, concluding close to dawn on Monday.
With the International Monetary Fund (IMF) projecting a 3.2% GDP growth rate for the fiscal year 2025, amidst declining inflationary pressures, Pakistan’s economy is expected to experience a boost. This growth is anticipated to have a positive impact on the unemployment rate, albeit a slight one.
Analysts say the market is also cheering a $119 million current account surplus for September and $771 million foreign direct investment (FDI) in FY25Q1, up by 48% year-on-year.
The surplus is the largest since April 2024, compared with a surplus of $29 million in August and a deficit of $218 million in September 2023, according to data from the State Bank of Pakistan released on Monday.
Topline Securities in its post-market note said that the stock market’s positive momentum was driven by expectations of an upcoming rate cut in the monetary policy announcement scheduled for November 4, 2024.
“Investor enthusiasm for K-Electric surged after the recent announcement that the National Electric Power Regulatory Authority (NEPRA) approved the generation tariff for all K-Electric power plants, effective after June 2023,” according to the report.
Additionally, Fauji Fertilizer, Habib Bank Limited, Kohat Cement Company Limited, Bank AL Habib, and Cherat Cement Company Limited collectively added 485 points to the index.
“Trading activity remained vigorous, with 696 million shares exchanged, totaling Rs 26 billion. K-Electric was the most actively traded stock, with an impressive 207 million shares transacted,” the report indicated said.
