The Pakistan Stock Exchange (PSX) hit a new all-time high and surpassed the psychological barrier of 54,000 during the early hours of trading on Tuesday amid the ongoing ‘timely’ IMF review of the domestic economy under its $3 billion loan programme.
However, later in the day, it receded below the barrier on profit-selling.
The domestic currency, however, slumped to a five-week low at Rs287 against the US dollar in the inter-bank market in the wake of rising demand for the foreign currency, as Pakistan and IMF discussed options to raise new foreign financing to overcome the shortfall in the ongoing fiscal year 2023-24.
The PSX benchmark KSE-100 Index hit a record high of 54,313 points, surging by over 450 points or nearly one percent. The index had closed at 53,860 points on Monday.
The intra-day high gains, however, reduced to 133 points with the benchmark index receding below 54,000 points at around 1:55pm. The correction was seen on intra-day profit selling.
Before the intraday correction, former Ministry of Finance official Dr. Khaqan Haasan Najeeb said in a brief comment “IMF talks and early signs of growth in agriculture and large scale manufacturing (LSM) helped to maintain the momentum at PSX, as the index takes above 54,000 points.”
Topline Securities CEO Muhammad Sohail said that due to the timely IMF review, it is highly expected that the international body would approve the release of the next loan tranche of $700 million soon.
The tranche would improve the country’s foreign exchange reserves and partly address the rising demand for the greenback.
Sohail said stock valuation remained attractive despite the index shooting to a new high, as share prices are trading at a price-to-earnings (PE) ratio of four these days compared to the usual seven to eight multiples. The lucrative share prices encourage many investors to buy stocks.
On the other hand, the rupee maintained its downward trend on the twelfth consecutive working day and reached a five-week low at Rs287 against the greenback around mid-day due to a surge in demand for the foreign currency.
The local currency reduced significantly by Rs1.71 in intra-day trading to Rs287 compared to Monday’s close at Rs285.29/$