PSX surges to record close above 82,000 points on economic optimism

Stocks scaled a new peak on Friday, with the benchmark index surpassing the 82,000 mark during intraday trade, as forecasts of declining inflation and hopes of further monetary loosening by the central bank spurred a buying spree, traders said.

The KSE-100 index jumped by 615.16 points, or 0.76%, to reach 82,074.44 from its previous close of 81,459.28.

The index, fuelled by buying activity in heavyweight shares, rallied nearly 900 points during the opening hours of trading before succumbing to profit-taking in the latter half of the session, trimming early gains. 

Analysts attributed this bull run to expectations of a sharp drop in inflation and interest rates. They added that government securities now have a kinked yield curve, with 2-year and 5-year yields above the 3-year yield.

Buying activity was seen in key sectors, including cement, commercial banks, fertiliser, and refineries, with index-heavy stocks such as MEBL, UBL, ENGRO, and FFC trading in the green.

Arif Habib Limited (AHL), a brokerage house, in its post-market note said the last trading day of the week saw heavy trade in the first half on the back to the FTSE rebalancing, which saw domestic and foreign counters active on the buy side soaking up the supply.

On Friday 58 shares rose while 40 fell with the largest positive index contributions coming from HBL PA (+6.84%), MEBL PA (+4.61%), MCB PA (+4.15%)

The largest index drags were FTSE names OGDC PA (-3.13%), HUBC PA (-1.71%) and PPL PA (-2.65%)

“With a large chunk of foreign supply taken out of the market coinciding with the market closing at new all-time highs the coming weeks should see upside acceleration with the market targeting 86k,” the AHL report said.

Experts added that part of the positivity comes from investors anticipating the International Monetary Fund (IMF) Executive Board's approval.

The IMF is scheduled to review Pakistan’s 37-month Extended Fund Facility (EFF), amounting to about $7 billion, on September 25.

JS Research in its market wrap said the trading commenced on a positive trajectory, with investor mostly taking positions in banking, E&P (exploration and production), power, and fertiliser sectors amid FTSE rebalancing.

Among the top volume leaders were FCSC (-1.1%), OGDC (-3.1%), FFBL (- 7.7%), WTL (-1.5%) and PACE (0.5%).

“As we look forward, we recommend investors contemplate a buy-on-dips strategy with emphasis on banking, fertiliser, E&P, and, technology sector stocks,” the JS analysts said in its report.

On Thursday, the Pakistan Stock Exchange (PSX) rose on improved local macroeconomic indicators and a larger-than-expected reduction by the Federal Reserve, with the KSE-100 index closing at 81,459.29, a gain of 997.95 points or 1.24%.

Meanwhile, world stocks hovered near record highs on Friday, underpinned by a big interest rate cut from the Federal Reserve earlier this week, while the yen eased after Bank of Japan Governor Kazuo Ueda tempered market expectations around imminent rate hikes, according to Reuters.

The dollar climbed 1.2% on the Japanese currency to 144.29 - its strongest in two weeks - on the back of Ueda's remarks, having earlier fallen around 0.6% to 141.74 after the BOJ kept interest rates steady in a widely expected move.