PSX achieves highest close yet on strong macros, ends notches below 90,000

• Analysts say strong corporate results fuelling ongoing rally.
• Indicators like remittances, current account, FDI lift morale.
• Institutional buying also contributing to record-making streak.

Stocks zoomed past the 90,000-point mark in early trade before settling a few notches below the historic psychological barrier, buoyed by robust economic indicators and stabilising fundamentals amid hopes for an extension of the hawkish monetary regime by the central bank.

The Pakistan Stock Exchange's (PSX) benchmark KSE-100 Shares Index gained 1047.98 points or 1.18% to close at 89,993.96 points aftering hitting a day high of 90,593.61 points.

Commenting on the 90,000 barrier breach, Arif Habib Limited's (AHL) Head of Research Tahir Abbas told Geo.tv that the market's overall momentum was positive.

"If you look at the economic indicators like remittances, current account, etc, they are improving, which is affecting the market positively," the analyst said.

He noted that, with inflation on a downward trajectory, the interest rate was expected to see a further cut of 2% to 2.5% in the upcoming monetary policy meeting on November 4, 2024.

"Even though stocks have been rallying for some time, valuations are still attractive and cheap, while the market is trading at a price-to-earnings ratio of 4.2x, while its six-year average is around 6x," Abbas said.

The analyst further said that there was an ample flow of liquidity in the stocks, and since fixed-income investments were not offering solid returns, investors were entering the equities market. "This shift is driving value buying in the market," he added.

In its previous meeting, the SBP's Monetary Policy Committee (MPC) enacted its most significant rate cut since April 2020, slashing the key policy rate by 200bps to 17.5% due to moderating inflation and falling international oil prices.

If reduced then it would mark the fourth consecutive rate cut since the SBP began reversing interest rates in June 2024, signalling a notable improvement in the country’s macroeconomic outlook and a shift in the central bank’s monetary policy stance.

Topline Securities attributed the rally to institutional buying, good corporate results announcements, and strong expectations of a significant rate cut in the key rate in the upcoming monetary policy meeting.

Pakistan State Oil (PSO PA) announced its 1QFY25 financial result with an unconsolidated profit of Rs8.46/sh (down 82% YoY) compared to Rs46.62/sh in 1QFY24, the brokerage said in its report, which garnered investor interest and as a result closed at Rs224.98, jumping by a massive 9.58%.

With the first-quarter (1QFY25) corporate results rushing in, investors are bingeing on high-performing sectors such as auto-makers, cement, commercial banks, oil and gas exploration, oil marketing, and power generation.