The Pakistan Stock Exchange's swift recovery and record-breaking gains amidst early-week challenges underscore strong investor confidence and its resilience in navigating market uncertainties.
- Sharp Decline Amid Political Instability Shakes Market Early in the Week
- Market Rebounds as Political Calm Restores Investor Confidence
- Banking Sector Drives Momentum Following Policy Adjustments
- Institutional Investors Offset Foreign Selling to Maintain Growth
- Economic Indicators Boost Market Sentiment and Stability
- Sectoral Performances Lead Recovery Across Key Industries
- Top Performing Stocks Highlight Investor Preferences
KARACHI: The Pakistan Stock Exchange (PSX) experienced an impressive week, closing at a historic high of 101,357 points, reflecting a 3.6% increase. This marked the first time the index crossed the 100,000-point threshold, signaling renewed investor confidence amid a mix of political and economic developments.
Market Volatility and Recovery
The week began with significant market pressure, as the KSE-100 Index recorded its sharpest single-day decline of 3,506 points (3.57%), driven by political instability. However, midweek optimism followed the resolution of protests led by the Pakistan Tehreek-e-Insaf (PTI), allowing the market to recover.
On Wednesday, the index posted an extraordinary rebound, gaining nearly 4,700 points in a single session—its highest one-day gain on record. By Thursday, the market surpassed the 100,000-point milestone, a testament to the resilience of investor sentiment.
Banking Sector Boosts Momentum
The banking sector played a pivotal role in driving the market upward. Optimism surged following policy adjustments, including the removal of the Minimum Deposit Rate (MDR) for traditional banks. This, combined with a decline in government bond yields by 61-85 basis points, created favorable conditions for financial institutions and reinforced investor confidence.
Furthermore, analysts highlighted falling inflation expectations, with projections for November dropping to 4.7%, making stocks a more appealing investment compared to other assets.
Institutional Investors Lead the Way
Despite foreign investors selling stocks worth $15 million, domestic institutional investors, including mutual funds and insurance companies, stepped in to support the market. This local buying activity offset the impact of foreign outflows, ensuring that market momentum remained strong.
Average trading volumes for the week stood at 979 million shares, showing only a minor decline of 1% compared to the previous week, reflecting sustained market participation.
Economic Indicators Strengthen Sentiment
Key economic indicators provided additional support to the market. The government raised Rs616 billion in its Treasury bill auction, although short of its Rs800 billion target, reflecting cautious optimism among investors.
Auto financing saw a 3.7% monthly increase, reaching Rs236 billion in October, signaling improving consumer confidence. Foreign exchange reserves rose by $131 million to $11.4 billion, bolstered by a $500 million disbursement from the Asian Development Bank under its climate financing program.
Sectoral and Stock Performances
The PSX’s recovery was driven by robust sectoral performances, with significant contributions from commercial banks (1,676 points), technology and communication (349 points), oil and gas exploration (284 points), marketing (260 points), and cement (234 points).
Habib Bank Limited led the stock-specific gains, adding 694 points, followed by Bank AL Habib (538 points) and Pakistan Petroleum (274 points). Systems Limited and Bank Alfalah also contributed 255 points and 205 points, respectively.
Positive Outlook for the Coming Week
Market analysts are optimistic about continued growth in the coming week, driven by expectations of further inflation reductions and attractive valuations in key sectors. With inflation projected to remain low, equities are expected to retain their appeal for investors seeking higher returns.
While the Pakistani rupee weakened marginally by 0.10% to Rs278.04 per dollar, the overall economic environment points to stability. The PSX’s performance reflects strong investor confidence and positions it for further gains in the near term.
The PSX’s robust performance last week highlights its ability to navigate challenges and capitalize on emerging opportunities, setting a positive tone for the weeks ahead.