Pakistan Stock Exchange (PSX), while marching rapidly towards north in a remarkable fashion, crossed the 75,000-point mark and rose to historic highs during the outgoing week, led mainly by exploration and production (E&P), fertiliser and banking sectors.

Emerging positive economic indicators encouraged many market players to build their positions, which fuelled the extensive stock buying spree.

Among the major positives were talks between Pakistan and the International Monetary Fund (IMF) for a new, larger loan programme.

A significant current account surplus in April and a jump in the country’s foreign currency reserves above $9 billion along with a stable Pakistani rupee instilled confidence among investors.

The market also got support from growth in the output of large-scale manufacturing (LSM) industries and an anticipated big slowdown in inflation.

Day-by-day movement of the market showed that at the beginning of the week on Monday stocks surged to unprecedented highs with the addition of more than 700 points over optimism about the outcome of loan talks with the IMF.

Next day, the bourse rallied again and surged past 74,500 points where investors demonstrated deep interest ahead of budget announcement and in anticipation of a bigger IMF loan package.

The KSE-100 index recorded a U-shaped recovery on Wednesday, driven by multiple factors including the prime minister’s announcement to privatise state-owned enterprises (SOEs), which helped the market scale new highs.

The bullish trend continued the following day as well with the index hitting another peak with an increase of nearly 270 points.

On Friday, the index shot up to a new record peak above 75,000 points as investors took cue from the current account surplus and a surge in foreign currency reserves.

The benchmark KSE-100 index soared 2,257 points, or 3.09% week-on-week (WoW), and settled at 75,342.35.

JS Global analyst Shagufta Irshad, in her report, wrote that the KSE-100 continued its uptrend during the outgoing week and broke the 75k barrier.

“The KSE-100 index is up 12.9k points, or 21%, so far in calendar year 2024 with banks, fertiliser and exploration and production sectors being the key contributors,” she said.

On a WoW basis, average daily volumes, however, declined 23% to 554 million shares while average traded value dropped 10% to $79 million.

Banking, E&P and fertiliser stocks continued to attract foreign investors’ interest. The MSCI added the National Bank of Pakistan (NBP) in its Frontier Market Index, taking the total number of stocks from Pakistan to 77.

According to a latest report, the LSM sector posted an increase of 2% year-on-year (YoY) in March 2024, a positive YoY growth for the fourth consecutive month, the analyst said.

Meanwhile, imports of crude oil and petroleum products reached a 10-month high at $1.125 billion in April while the current account remained in surplus for the third consecutive month in April.

Moreover, the State Bank’s forex reserves stood above $9 billion with a rise of $15 million, the JS analyst added.

Arif Habib Limited (AHL), in its commentary, said that market sentiment remained positive throughout the week and the KSE-100 closed at an all-time high of 75,342 points.

The strong market performance came on the back of optimism surrounding negotiations for a new IMF loan package, it said.

On the economic front, the LSM output increased 2% YoY but decreased 9.35% month-on-month in March 2024. Furthermore, Pakistan posted a current account surplus of $491 million in April.

T-bill yields in the secondary market recorded a decline across all tenors, specifically the drop of 62 basis points in 12-month bills, in anticipation of a rate cut in June 2024 monetary policy committee meeting.

Sector-wise, positive contribution came from commercial banks (1,076 points), E&P (396 points), fertiliser (196 points), automobile parts and accessories (102 points) and engineering (72 points).

Foreign investors bought shares worth $14.94 million during the week under review compared to net buying of $2.73 million last week, AHL added.

Published in The Express Tribune, May 19^th, 2024.

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