PSX enjoys 3rd largest single-day rally as shares climb over 3,900 points

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Bulls take control at the Pakistan Stock Exchange (PSX) — PSX data portal
Bulls take control at the Pakistan Stock Exchange (PSX) — PSX data portal

Bulls decided to take control of the trade floor at the Pakistan Stock Exchange (PSX) on Monday as shares gained more than 3,900 points on investors’ expectations of the key interest rate reaching single digits in the near future.

The benchmark KSE-100 index climbed 3,678.20, or 3.30 per cent, to stand at 115,029.37 from the previous close of 111,351.17 at 3:09pm.

Finally, the index closed at 115,258.99, up by 3,907.82 or 3.51pc, from the last close, marking the third largest single-day point-wise rally.

Awais Ashraf, director of research at AKD Securities, attributed today’s movement to be driven due to the year’s end “as institutions aim to close their portfolios at higher rates”.

Additionally, he highlighted that a “successful rollover” of approximately Rs55 billion in futures was contributing to this trend.

He explained that at the end of each month — during the last week — people “holding positions in futures either have to buy stocks from the ready market to clear their position or have to buy a new future contract of the same stock”.

Futures are contracts to buy or sell a specific underlying asset at a future date.

Speaking about the future of the KSE-100 index, Ashraf said, “We believe, the KSE-100 Index is set to post another year of strong returns, as interest rates are anticipated to fall to single digits in 2025 due to a strong external account.

“Falling returns from alternative investments are expected to make equities the preferred asset class in 2025,” he added. Ashraf noted, “We forecast the KSE-100 Index would reach 165,215 by Dec 25, providing a 45pc return (41pc in USD terms).

“Furthermore, the focus on structural reforms and tight fiscal and monetary policies under the IMF program is expected to improve the investment climate and support a market rally.”

Yousuf M. Farooq, director of research at Chase Securities, said, attributed the climb to remarks by Finance Minister Muhammad Aurangzeb, who yesterday predicted that inflation for the month could clock in between 4-5pc and that single-digit interest rates were a possibility.

On Sunday, while talking about achieving sustainable growth, the finance minister noted that inflation had slowed down to nearly 5pc, with the interest rate down to 13pc.

“These are all the things that indicate that the wheel of the economy has started moving — and I would be the last person to say that we have achieved whatever we said — however, in the last six months the macroeconomic stability which makes the foundation is there so we can achieve sustainable growth,” he said.

However, he cautioned that the country was still an “import-led economy” and it was critical to ensure that they headed towards export-led growth, adding that they had created the foundation where in 2025 they could head towards sustainable growth.

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