Historic high: KSE-100 crosses 100,000 as investors turn back focus on economy

The Pakistan Stock Exchange (PSX) made history on Thursday, as the benchmark KSE-100 Index settled above the 100,000 level for the first time, continuing a remarkable turnaround after it had plunged earlier in the week due to violent protests in Islamabad.

Bulls continued from where they left off in the previous session, pulling the index beyond the 100k level.

The day began with a 1% gain, driven by buying across the board as the index completed the journey that has seen it rise from around 40,000 in June 2023.

However, profit-taking began soon after as the index retreated to the 99,600 level by 11:20am, but remained in the green zone.

Buying momentum picked up pace in the latter half of the trading session, and the benchmark index again breached the 100,000 level by 2:20pm.

At close, the KSE-100 settled at 100,082.77, an increase of 813.52 points or 0.82%.

“This remarkable performance reflects a 60% increase CY24TD and a staggering 141% rise since June 2023,” said Arif Habib Limited (AHL) in a note.

A combination of exchange rate stability, a transition from one $3-billion Stand-By Arrangement to another longer facility with the International Monetary Fund (IMF), improvement in index-heavy sector’s earnings, and a general mood for stocks after monetary easing have been just a few factors behind the KSE-100’s phenomenal rise.

“Faster than expected fall in inflation and interest rates adding cash liquidity to the stock market,” said Mohammed Sohail, CEO of brokerage house Topline Securities, in a note.

“Despite the rally, Pakistan still trades at PE of 5x compared to the historical average of 7x.”

However, many also question if the rally has room to continue.

“The positive momentum at the KSE-100 is expected to continue, with a 4-5% increase anticipated by the end of 2024, reaching the 104,000-105,000 level,” Samiullah Tariq, Head of Research and Development at Pakistan Kuwait Investment Company (Private) Limited, told Business Recorder.

“A decline in interest rate has lowered return on other assets. A significant portion of liquidity had been tied up in mutual funds, which has now started to shift towards equities for higher returns.”

On Wednesday, the PSX rebounded emphatically with the benchmark index gaining nearly 4,700 points, its largest ever single-day point increase on record, to settle above the 99,000 level for the first time.

Globally, Asian shares were subdued on Thursday and the dollar was on the defensive after US data showed progress in slowing inflation had stalled even as the economy remained resilient, raising doubt over the path the Federal Reserve could take next year.

With the US Thanksgiving holiday likely to keep trading thin for the rest of the week, traders remained hesitant in placing major bets.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.07% lower, with Japan’s Nikkei up 0.46%.

Meanwhile, the Pakistani rupee registered a marginal decline against the US dollar, depreciating 0.03% in the inter-bank market on Thursday. At close, the currency settled at 278.04, a loss of Re0.08 against the greenback.

Volume on the all-share index increased to 1,164.79 million from 1,057.10 million on Wednesday.

The value of shares rose to Rs39.78 billion from Rs39.56 billion in the previous session.

B.O.Punjab was the volume leader with 179.22 million shares, followed by K-Electric Ltd with 64.87 million shares, and Bank Makramah with 60.30 million shares.

Shares of 452 companies were traded on Thursday, of which 290 registered an increase, 118 recorded a fall, while 44 remained unchanged.