Another record high: KSE-100 closes shy of 110,000

After an initial selling spree, buying momentum returned to the Pakistan Stock Exchange (PSX) with the benchmark KSE-100 Index settling near the 110,000 level, a new record high, on Monday.

Earlier in the session, the benchmark index lost over 1,000 points amid selling driven by the banking sector.

However, the market managed to brush off the negative sentiments, hitting an intra-day high of 110,358.85.

At close, the benchmark index settled at 109,970.38, an increase of 916.43 points or 0.84%.

Buying was observed in key sectors including automobile assembler, cement, fertilizer, oil and gas exploration companies, and OMCs. Meanwhile, the banking sector remained under selling pressure.

Index-heavy stocks including ENGRO, OGDC, MARI, PPL, PSO SSGC, SNGP and HUBCO traded in the green.

Market analysts have attributed the ongoing upward momentum to improved macroeconomic indicators including a decline in the inflation rate, which dropped to 4.9% in November, and expectations of a further interest rate cut by the central bank.

On the other hand, the downturn trend in the banking sector was due to the government’s decision to form a high-level committee to resolve the issue of Advances to Deposit Ratio (ADR) in the banking sector, said experts.

“Uncertainty regarding the alternative mechanism the committee might propose is weighing on investor sentiment,” Sana Tawfik, Head of Research at Arif Habib Limited (AHL), told Business Recorder earlier.

Under the Terms of References (ToRs), the committee shall review the existing legal framework of fiscal measures related to ADR of the banking sector. It would also deliberate on alternate fiscal schemes to tax bank profits accrued from investment in government securities.

During the previous week, PSX continued its record-breaking trend and hit new historic levels with impressive gains and high trading activities on the back of strong interest of local investors coupled with institutional support on expectations of further decline in interest rate after declining inflation in the country.

The benchmark KSE-100 index surged by 7,696.63 points or 7.6% on a week-on-week basis and closed at 109,053.95.

Globally, Asian shares struggled with a slide in South Korea on Monday ahead of a packed week of central bank meetings that should see borrowing costs take a step lower, while US inflation data are the last hurdle to further policy easing there.

Chinese figures out on Monday showed the consumer price index fell a surprisingly large 0.6% in November, pulling annual inflation down to just 0.2% and underlining the need for more drastic policy stimulus.

Political tumult in France and South Korea was joined by the fall of Syrian President Bashar al-Assad’s regime, which complicated an already fraught situation in the Middle East.

Still, the mood was generally upbeat after US November payrolls showed enough of a recovery to assuage concerns of a slowdown, but not so much as to forestall a rate cut from the Federal Reserve next week.

The US consumer price report is out Wednesday and the core is seen holding at 3.3% for November, which should be no impediment to an easing.

Meanwhile, the Pakistani rupee remained largely stable against the US dollar, appreciating 0.01% in the inter-bank market on Monday. At close, the currency settled at 277.98, a gain of Re0.03 against the greenback.

Volume on the all-share index decreased to 1,597.87 million from 1,697.84 million on Friday.

However, the value of shares rose to Rs60.25 billion from Rs57.49 billion in the previous session.

K-Electric Ltd was the volume leader with 164.51 million shares, followed by WorldCall Telecom with 161.91 million shares, and Cnergyico PK with 113.02 million shares.

Shares of 467 companies were traded on Monday, of which 278 registered an increase, 158 recorded a fall, while 31 remained unchanged.