KSE-100 retreats after briefly hitting record high of 82,000

Improved macroeconomic indicators at the local front and the Federal Reserve’s larger-than-usual reduction in the policy rate drove investor optimism at the Pakistan Stock Exchange (PSX) as the benchmark KSE-100 Index touched a record high of 82,000 during intra-day trading on Thursday.

The KSE-100 started with a strong buying spree that continued for most part of the day, though late-session buying trimmed some gains.

At close, the benchmark index settled at 81,459.29, a gain of 997.95 points or 1.24%.

“Pakistan’s stock market is on the verge of [closing above] 82,000 for the first time in history, propelled by key economic reports suggesting that the economy is stabilising, as well as expectations of interest rate cuts by the central bank after the government unexpectedly rejected all bids for Market Treasury Bills,” brokerage house Topline Securities said in its post-market report.

The upward momentum was largely driven by FFC, EFERT, MEBL, MCB, and OGDC, which collectively contributed 690 points to the index, it added.

Market experts attributed the bullish trend to a number of factors.

“The Federal Reserve rate cut is definitely one of the reasons driving the market,” Sana Tawfik, Head of Research at Arif Habib Limited (AHL), told Business Recorder during the first half of the session.

The US Federal Reserve cut interest rates by half of a percentage point on Wednesday, kicking off what is expected to be a steady easing of monetary policy with a larger-than-usual reduction in borrowing costs that followed growing unease about the health of the job market.

“The committee has gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” policymakers on the US central bank’s rate-setting committee said in their latest statement.

On the other hand, improvement in local macroeconomic indicators including a current account surplus and expectation of further decline in inflation is also fueling the positive sentiment, said Tawfik.

Pakistan’s current account posted a surplus of $75 million in August 2024 compared to a deficit of $152 million in the same month of the previous fiscal year, data released by the State Bank of Pakistan (SBP) on Wednesday showed.

“The market was already optimistic especially due to developments on the International Monetary Fund (IMF) front, and is expected to remain so in the coming days as the IMF Executive Board meets to approve funding for Pakistan,” she added.

The IMF board is scheduled to take Pakistan’s 37-month Extended Fund Facility (EFF) of about $7 billion on the agenda on September 25.

On Wednesday, the benchmark KSE-100 Index settled at 80,461.34, up by 970.20 points or 1.22%.

Meanwhile, the Pakistani rupee made further improvement against the US dollar on Thursday and closed below 278 level after more than five months. The local unit appreciated 0.05% in the inter-bank to close at 277.91 against the greenback, a gain of Re0.13 as compared to the previous day.

Volume on the all-share index increased to 459.04 million from 400.19 million on Wednesday.

The value of shares rose to Rs18.61 billion from Rs15.9 billion in the previous session.

Kohinoor Spinning was the volume leader with 35.18 million shares, followed by K-Electric Ltd with 23.82 million shares, and WorldCall Telecom with 22.93 million shares.

Shares of 469 companies were traded on Thursday, of which 145 registered an increase, 239 recorded a fall, while 85 remained unchanged.