As shares at the Pakistan Stock Exchange (PSX) rose more than 800 points on Tuesday, temporarily breaking beyond the 96,000 barrier for the first time, bulls continued to dominate the trading floor.
From its previous close of 94,995.67 points at 11:08am, the benchmark KSE-100 index increased 812.70 points, or 0.86 percent, to stand at 95,808.37 points. The index increased by 1006.33 points at 2:44 pm, marking the first time it has crossed the 96,000 mark. The index ended the day up 860.99 points, or 0.91 percent, from the previous finish, closing at 95,856.66 points.
Yousuf M Farooq, director research at Chase securities, said, “Media reports indicating the absence of a mini-budget and a positive signal from the IMF have boosted market sentiment, fuelling the continuation of the rally.”
Nonetheless, he issued a warning, stating that several analysts were still “wary of the political climate, which may impede this progress.”
He stated that the “primary risk at this juncture appears to be the political climate.” “Funds and individual investors are actively pursuing stocks, and flows are expected to persist as interest rates are anticipated to decline further in December,” he said.
He said, “Market corrections are a normal part of investing, and retail investors should focus on diversification within their portfolios and fully understand their investments and the risks involved.”
The upward momentum was sustained, according to Sana Tawfik, head of research at Arif Habib Limited, because of better liquidity and macroeconomic indicators.
“I think the fundamentals are still intact, despite the political risks,” she said, noting that the current account surplus was a major factor in maintaining the upward momentum.
The data from the State Bank of Pakistan, which was made public on Monday, shows that the nation’s monthly surplus in October was $349 million, up from $86 million in September. This indicates that the government’s objective of limiting imports has been consistent.
The government found it extremely promising that the current account had a $218 million positive during the July–October period, compared to a $1.528 billion deficit during the same period previous year.
The International Monetary Fund’s (IMF) “positive statement following the conclusion of its mission visit has alleviated concerns about a potentially inflationary mini-budget, boosting investor confidence,” according to Awais Ashraf, director of research at AKD Securities, was responsible for the bull run.
He noted that banks have been selling to realize capital gains in order to lessen the impact of advance-to-deposit ratio (ADR) taxation on profitability. “In the meantime, consistent buying by mutual funds this fiscal year, driven by monetary easing, has helped offset foreign outflows linked to FTSE rebalancing and selling by banks,” he said.
Foreign withdrawals occurred after FTSE Russell, a global index provider, revealed in July that Pakistan had not met the minimum securities count criterion for maintaining secondary developing market designation.
The benchmark KSE-100 index reached an all-time high above 95,000 during intraday trading last week, thanks to the influx of favorable economic data that has helped the stock market sustain its bullish momentum.
