KSE-100 index breaches 72,000, creates new all-time high

Published April 24, 2024
This image shows activity on the Pakistan Stock Exchange on Wednesday. — Screenshot via PSX data portal
This image shows activity on the Pakistan Stock Exchange on Wednesday. — Screenshot via PSX data portal

Bulls returned to the trading floor at the Pakistan Stock Exchange (PSX) as shares climbed nearly 700 points on Wednesday to breach the key 72,000 level for the first time.

The benchmark KSE-100 index gained 827.36, or 1.16 per cent, to stand at 72,186.76 at 12:21pm from the previous close of 71,359.40 points. Finally, the index closed at 72,051.89, up by 692.49 points or 0.97pc, from the previous close.

Mohammed Sohail, chief executive of Topline Securities, observed that this was yet “another record high at the PSX”. He attributed the rally to being “mainly led by institutional buying”.

“After record current account surplus, investors are now expecting a big fall in April CPI (Consumer Price Index) that may result in a cut in interest rate in coming months,” he added.

The KSE-100 index had breached the key 71,000 level on Monday.

Shahab Farooq, director of research at Next Capital Limited, attributed the upward momentum to “improving outlook of Pakistan’s economy with expected investments from the Kingdom of Saudi Arabia, ongoing disinflation (April 2024 inflation expected at 16.8pc with policy rate of 22pc) and expected beginning of monetary easing”.

Additionally, he said that such factors coupled with healthy results announcements propelled investor confidence in “investing in cyclical sectors” which included cement and steel, “along with continued interest in banks”.

“The market is rallying due to robust corporate earnings and anticipation of decreasing interest rates,” Yousuf M. Farooq, director of research at Chase Securities, said. He added that “some technical analysts predict a temporary pause in the market’s upward trend following an extended rally”.

“As the economy rebounds, certain sectors — especially cyclical — might experience significant earnings growth, and the market has begun to factor that in, to some extent,” Farooq said.

Additionally, Farooq observed that the drop in treasury yields the previous day had also “sparked excitement, with the one-year treasury bill down 49 basis points in the secondary market, driven by expectations of an interest rate decline”.

He explained: “The prospect of declining rates renders stocks more appealing, potentially prompting a shift from fixed income to equities over the next year.”

Farooq noted that some stocks still offered dividend yields of up to 20pc, which he said could further increase as earnings grow.

“In contrast, investments in government securities entail significant reinvestment risk. Opting for a one-year T-bill could result in locking in a considerably lower rate upon maturity of the current bond,” he highlighted.

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