KARACHI:

Pakistan Stock Exchange (PSX) displayed a remarkable rally during the outgoing week when it soared to new all-time highs and surpassed the 68,000-point mark.

The week, shortened by the Jummatul Wida holiday, saw a surge in activity as investors were enthusiastic and believed that the policy rate cut was in the offing.

Robust cement sales and a marked decline in inflation to 20.68% for March 2024 also boosted sentiment at the bourse.

At the beginning of the week on Monday, stocks displayed a mixed performance but registered losses as profit-taking intensified towards the end of March quarter amid concerns over economic uncertainty.

Next day, the KSE-100 index rebounded, showing signs of recovery as investors took cue from the decline in inflation reading to 20.68%, which could lead to an easing of monetary policy by the State Bank of Pakistan (SBP).

On Wednesday, the PSX soared to a new record high as it crossed the 67,700 barrier with a surge of more than 850 points on the back of investor enthusiasm about the potential policy rate cut and strong cement sales.

Next day, stocks continued its record-setting rally as it surged above 68,000 points over investors’ growing interest in pharmaceutical stocks following court’s verdict in favour of the industry, and a robust corporate earnings outlook.

The benchmark KSE-100 index added 1,412 points, or 2.11% week-on-week (WoW), and settled at 68,416.78.

JS Global Deputy Head of Research Muhammad Waqas Ghani, in his report, wrote that the KSE-100 index reached an all-time high of 68,417 during the week, taking WoW gains to 2%.

Average volumes, however, dropped 8% WoW and average traded value fell 4%.

PIA’s momentum stalled as the stock experienced a 17% decline during the week, with investors opting to book profits. In addition to the PIA deal, the government’s plans to sell OGDC shares to Saudi investors spurred buying activity in the stock, resulting in a 3% gain, he said.

The federal government raised petrol prices by Rs9.66 per litre owing to an increase in ex-refinery rates.

On the economic front, March Consumer Price Index (CPI) clocked in at 20.7% while month-on-month (MoM) inflation rose 171 basis points.

The year-on-year (YoY) headline inflation touched a 22-month low, resulting in positive real interest rate in March 2024 for the first time since December 2020, he said.

Additionally, Pakistan’s trade deficit shrank 25% to $17 billion during 9MFY24 due to a considerable reduction in imports and an increase in exports. The trade deficit for March, however, stood higher on both yearly and monthly basis.

In the T-bills’ auction held during the week, cut-off yields increased for six-month papers whereas for three and 12-month bills, the yields remained unchanged. Moreover, the SBP’s reserves remained stable at $8 billion, the JS deputy research head added.

Arif Habib Limited (AHL), in its report, said that throughout the four-day trading week, the market continued its positive momentum and witnessed a surge from 67,005 to 68,416 points, hitting an all-time high.

“Market sentiment was fuelled by the promising inflation numbers and expectation of interest rate reversal. Headline inflation for March 2024 clocked in at 20.7% on a YoY basis, indicating a decline from the previous month, when inflation rate was 23.1%,” it said.

Foreigners’ buying continued during the week, which came in at $3.9 million compared to net buying of $3.6 million last week, AHL added.

Published in The Express Tribune, April 6th, 2024.

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