KARACHI: The Pakistan Stock Exchange (PSX) has witnessed a bullish return as shares surged by 900 points on Wednesday, breaching the key 72,000 level for the first time. The benchmark KSE-100 index gained 854.19 points, or 1.2 percent, reaching 72,213.59 at 10:33 am from the previous close of 71,359.40 points.
Local media quoted Mohammed Sohail, chief executive of Topline Securities, stating that this was another record high at the PSX, attributing the rally mainly to institutional buying. He noted, “Following a record current account surplus, investors are anticipating a substantial decrease in April’s CPI (Consumer Price Index), which might lead to interest rate cuts in the upcoming months.”
The KSE-100 index crossed the key 71,000 level on Monday. Shahab Farooq, director of research at Next Capital Limited, attributed the upward momentum to the improving outlook of Pakistan’s economy, with expected investments from the Kingdom of Saudi Arabia, ongoing disinflation (April 2024 inflation expected at 16.8 percent with a policy rate of 22 percent), and the expected beginning of monetary easing.
He also stated that these factors, along with healthy results announcements, propelled investor confidence in investing in cyclical sectors like cement and steel, along with continued interest in banks.
Yousuf M. Farooq, director of research at Chase Securities, said, “The market is rallying due to robust corporate earnings and anticipation of decreasing interest rates.” He added that “some technical analysts predict a temporary pause in the market’s upward trend following an extended rally.”
Farooq observed that some stocks still offered dividend yields of up to 20 percent, which could further increase as earnings grow. He highlighted the reinvestment risk involved in investments in government securities, emphasizing that opting for a one-year T-bill could result in locking in a considerably lower rate upon maturity of the current bond.
