KARACHI: Economic optimism driven by robust data and expectations of an interest rate cut next month, the stock market extended its record-setting spree in the outgoing week, propelling the benchmark index to its highest-ever level near 86,000 despite aggressive selling by foreigners.

Arif Habib Ltd (AHL) said the market displayed remarkable performance in the outgoing week by reaching an all-time high of 85,669 points on a closing basis on Wednesday. The scrips such as Oil and Gas Development Comp­any (OGDCL) and Pakistan Petroleum Ltd (PPL) remained in prime focus throughout the week, given their latest published detailed accou­nts reported almost 100 per cent cash sales in 4QFY24, with accumulation of circular debt halted.

On the economic front, the country received a remittance inflow of $8.8 billion in 1QFY25, marking a 39pc year-on-year increase. Moreover, the government bought back T-bills amounting to Rs475bn, while net investments through the Roshan Digital Account reached $1.532bn.

Furthermore, auto sales rose to 27,600 units in 1QFY25, reflecting a 31pc year-on-year incr­ease compared to the previous year. The State Bank of Pakistan’s foreign exchange reserves reached the highest since April 2022 to $10.8bn, a rise of $106m week-on-week. Meanwhile, the rupee lost 12 paise or 0.04pc against the dollar to Rs277.5.

As a result, the benchmark KSE 100 index settled at 85,483.40 after adding 1,951 points or 2.34pc week-on-week.

AKD Securities Ltd said the overall positive sentiment was primarily driven by improved liqui­dity toward equities, as local funds continued to shift flows from fixed-income assets due to easing interest rates. Inve­stor optimism was further bolstered by the visit of a Saudi delegation, which resulted in the signing of 27 MoUs worth $2.2bn and discussions surrounding the Reko-Diq stake acquisition.

Additionally, the government finally terminated Power Purchase Agreements (PPAs) with five Independent Power Producers (IPPs), with discussions regarding 17 more IPPs lined up for future negotiations to shift from a take-or-pay model to a take-and-pay.

The trade deficit for September stood at $1.78bn, and the current account is expected to remain stable, with a potential surplus for the period.

According to AKD Securities Ltd, the market will likely stay positive, supported by declining interest rates, which will continue driving flows towards equities. Despite recent highs, the market remains attractive, with a price-to-earnings ratio of 3.7x and a dividend yield of 12.7pc.

Published in Dawn, October 13th, 2024