The Pakistan Stock Exchange (PSX) witnessed a remarkable surge in the outgoing week, exhibiting a bullish trajectory that propelled the KSE-100 index to unprecedented levels, reaching a pinnacle above 59,000 points. This substantial climb of over 2,000 points, a 3.5% week-on-week (WoW) increase, marked a momentous milestone for the market, underlining a positive sentiment among investors.
Factors Driving the Surge:
1. Encouraging Economic Indicators:
- Reports of a significant 91% year-on-year (YoY) decline in the current account deficit for October 2023 were pivotal in bolstering investor confidence.
- A near breakeven in the current account balance and growth in textile exports after 13 months contributed to the market’s optimism.
2. International Economic Landscape:
- Volatility in global oil prices, amidst expectations of production cuts and a delayed OPEC meeting, affected market sentiment.
- Foreign exchange reserves experienced a decline, standing at $7.2 billion.
3. Policy Changes and Sectoral Impact:
- The imposition of a 40% tax on windfall income from banks’ forex dealings during 2021 and 2022 by the Federal Board of Revenue (FBR) attracted attention.
- Expectations of a hike in gas prices aimed at curbing circular debt buildup increased interest in energy sector stocks.
Market Performance Throughout the Week:
Monday:
- The week commenced with marginal gains as uncertainties surrounding potential industrial gas and power tariff hikes influenced a range-bound session.
Tuesday:
- Notable gains were observed following positive data indicating a substantial YoY decline in the current account deficit, closing near the all-time high.
Wednesday:
- The market soared to a new record high, surpassing the 58,000-point threshold, driven by rupee recovery and improved current account balance.
Thursday and Friday:
- The PSX sustained its record-breaking streak, with the index soaring to new heights, reaching an unprecedented peak above 59,000 points.
Sector and Stock Performance:
Sector-Wise Contributions:
- Positive contributions from commercial banks, fertilizers, technology, and communication, as well as the glass, ceramics, and miscellaneous sectors, played a pivotal role in the overall index surge.
Individual Stocks:
- Stocks such as Meezan Bank, Bank AL Habib, Systems Limited, Fauji Fertiliser Company, and Mari Petroleum significantly contributed to the positive momentum.
Foreign Investment:
- Foreigners displayed continued interest in the market with a net buying of $8.5 million during the week, compared to $6.3 million in the previous week.
Conclusion:
The PSX’s monumental surge beyond 59,000 points showcased robust investor confidence fueled by positive economic indicators, policy changes, and sectoral developments. Despite concerns over fluctuating global oil prices, rupee volatility, and declining foreign reserves, the market exhibited resilience, marking an exceptional close to the trading week.
