Pakistan stocks steam ahead, crossing 101,350-point milestone

The capital market topped the 101,350-point mark on Thursday, as investors built on short and long positions, buoyed by receding political strife and a brighter economic outlook, with lower inflation projections further lifting sentiment.

The Pakistan Stock Exchange's (PSX) benchmark KSE-100 Shares Index secured 1,274.55 points or 1.27% to close at 101,357.32 points, after hitting an intraday high of 101,496.17 points.

Topline Securities in its market wrap attributed the investor optimism to the news that the State Bank of Pakistan (SBP) has received $500 million from the Asian Development Bank (ADB) as part of a loan for the government’s Climate Change and Disaster Resilience Enhancement Program (CDREP).

This disbursement is expected to help the SBP end November 2024 with reserves around the $12 billion mark.

"The banking sector continued its upward momentum, closing up by 1.8%. The removal of the Minimum Deposit Rate (MDR) requirement for corporate deposits continues to attract investor interest in the sector," the brokerage said in its report.

In terms of traded value, Pakistan Petroleum Limited (PPL) led the market with Rs1.93 billion, followed by Pakistan State Oil (PSO) with Rs1.88 billion, The Searle Company (SEARL) with Rs1.63 billion, Oil and Gas Development Company Limited (OGDC) with Rs1.53 billion, and Attock Refinery Limited (ATRL) with Rs1.29 billion.

The top contributors to the index were PPL, Service Industries Limited (SRVI), Bank Alfalah Limited (BAFL), Engro Corporation (ENGRO), and SEARL, which together contributed 400 points to the index’s rise.

Bank of Punjab (BOP) led the market in volume, with 95 million shares traded, according to the Topline report.

Analysts credited the stellar streak to several factors, particularly the government's unwavering commitment to implementing reforms.

The index crossed the 100,000-point mark for the first time in history on Thursday, reflecting a 60% year-to-date gain driven by a mix of 47% capital gains and 13% dividend yield.

The policy efforts to turn fiscal and external accounts into surpluses and decline in the cost of doing business contributed to boosting investor sentiment, according to analysts. They added a fall in yields and lower inflation expectations are also driving the market.

Finance Division in its Monthly Economic Update and Outlook has projected the inflation to slow to 5.8%-6.8% in November, and then further to 5.6%-6.5% in December.

“Inflation is expected ... [to] further recede to 5.6% - 6.5% by December 2024,” said the report released on Wednesday .

The central bank slashed interest rates by 250 basis points earlier in November in a bid to revive a sluggish economy amid a big drop in the rate of inflation.