PSX hits new high, building on post-26th amendment momentum

• Market sustains uptrend triggered by approval of judicial reforms.
• Index-heavy stocks, forecast to offer attractive payouts steal show.
• Analysts say investors to closely monitor finance minister's US visit.

Stocks on Tuesday built on post-26th Amendment gains to hit a new all-time high with index heavyweights, forecast to offer attractive payouts, remaining key draws during the earnings season amid hopes for political and economic stability, especially after improved current account numbers.

The Pakistan Stock Exchange's (PSX) benchmark KSE-100 Shares Index, gained 409 points or 0.48%, to end at 86,466, up from yesterday's close of 86,057 points. The index tested a new all-time high as it surged 798 points to 86,846 points in early intraday trade.

Analyst Ahsan Mehanti at Arif Habib Corp said the market gained strength from a $119 million current account surplus for September and $771 million foreign direct investment (FDI) in FY25Q1, up by 48% year-on-year.

The surplus is the largest since April 2024, compared with a surplus of $29 million in August and a deficit of $218 million in September 2023, according to data from the State Bank of Pakistan released on Monday.

After days of cautious trading, the capital market rallied following the enforcement of the 26th Amendment by the ruling coalition, ending weeks-long political uncertainty.

The government, which remained engaged in intense lobbying to power the changes to the constitution through the parliament for weeks, finally succeeded in clipping the powers of the superior judiciary to appoint its chief justice. 

The constitutional changes were approved in an extraordinary session of parliament which was assembled on Sunday, a public holiday, and ran all night, concluding close to dawn on Monday.

Various sectors, including automobile assemblers, cement, chemicals, commercial banks, oil and gas exploration companies, oil marketing companies (OMCs), and refineries, experienced significant buying activity.

The first quarter (1QFY2024) corporate earnings season is underway with robust forecasts and bullish investors are increasingly taking positions in high-valuation sectors.

Reacting to the rally, Khurram Schehzad, CEO of Alpha Beta Core, said the index was touching new heights due to economic and political stability. 

"Expectations for further declines in inflation and interest rates," Schehzad said adding that investors were also focusing on the finance minister's visit to the US.

Federal Minister for Finance, Muhammad Aurangzeb, is leading the Pakistan delegation to the Annual Meetings of the World Bank Group and IMF, which are currently underway in Washington DC from October 21-26.

Brokerage Arif Habib Limited (AHL) in a post-market note said that the index secured additional gains on Tuesday as the recent highs were surpassed.

Among the movers, 63 stocks rose while 34 declined, with Systems Limited (+7.44%), Lucky Cement (+2.61%), and Hub Power Company (+1.59%) making the largest contributions to index gains.

“Investors are also pricing in factors like disinflation as October CPI is projected at +6.3% YoY, bringing the average inflation rate for 4MFY25 to +8.50%, a notable decrease from +28.48% in the same period last year,” the brokerage said in its report.

Meanwhile, the country also posted a current account surplus of $119 million in September 2024, a reversal from the $218 million deficit in September 2023, marking the second consecutive month of surplus.

While the outlook remains positive, the AHL notes that, although the benchmark index continues to set new highs, the KSE-30 is diverging and has yet to outperform the high achieved on October 8.

“Support for the KSE-100 has risen to 85,000, with expectations for further upward movement above this level,” the brokerage reported.

Out of 451 actively traded stocks, 241 moved up, 149 went down, and 71 remained unchanged. K-Electric had the highest trading volume with 224.204 million shares, followed by World Call Telecom with 30.203 million, and Fauji Foods with 26.100 million shares. The total turnover increased from 474.949 million to 722.209 million shares recorded on Monday.