The Pakistan Stock Exchange (PSX) saw a resurgence of bullish activity on Wednesday, as the benchmark KSE-100 Index surged over 2,000 points during early trading hours, recovering from Tuesday’s profit-taking session. Eventually, the trading closed at 110,810.21 showcasing an increase of 1913 points or 1.76%.
At 10:42 AM, the KSE-100 Index was recorded at an all-time high of above 111,005 points, reflecting a gain of 2,108 points or 1.94%. The rally was supported by across-the-board buying in key sectors, including automobile assemblers, cement, commercial banks, fertilizers, oil and gas exploration companies, OMCs, refineries, and power generation. Notable stocks such as HUBCO, PSO, SSGC, SHELL, ENGRO, MCB, MEBL, HBL, and DGKC traded in the green.
The buying momentum was attributed to positive macroeconomic developments, particularly the decline in Pakistan’s inflation rate to 4.9% in November. This reduction has fueled expectations of a further policy rate cut during the upcoming Monetary Policy Committee (MPC) meeting, offering an optimistic outlook for investors.
A high-level meeting on Tuesday discussed the Advance-to-Deposit Ratio (ADR) policy and its implications for the banking sector. The discussions revolved around ADR’s role in enhancing commercial lending, its impact on productive sectors, and tax revenue optimisation. The government previously introduced higher tax rates on banks with ADR ratios below 50% through the Finance Act 2022 to incentivise lending and penalise reliance on passive income.
Tuesday’s trading session witnessed significant volatility, with the KSE-100 Index swinging between gains and losses before closing 1,073.74 points down at 108,896.65. Profit-taking by investors after a sustained rally contributed to the decline, but renewed buying momentum on Wednesday has reinstated optimism in the market.
Market analysts anticipate continued positivity if inflation trends persist, bolstered by expectations of further monetary easing. However, sector-specific developments and global economic conditions will remain key factors influencing market movements.
