Day trade: PSX tests 83,000 barrier on stronger economic indicators
Stocks soared over 900 points in Thursday’s intraday trade, hovering near the 83,000-point mark as renewed economic optimism spurred a rush for high-dividend-yielding shares, with investors betting on further monetary easing after inflation hit a 44-month low in September.
Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index gained 924.94 points or 1.13% to hit a high of 82,958.73 at around 2:06pm.
Commenting on the sharp intraday rise, Raza Jafri, CEO of EFG Hermes Pakistan, noted that lower bond yields were adding to the appeal of equities, particularly high-dividend yielding and highly leveraged names.
“A significant chunk of foreign supply has also been absorbed, which is giving more confidence to buyers. We expect the market to continue rising, and make new highs,” Jafri added.
Stocks edged higher on Wednesday, supported by falling inflation, a stable rupee, and agricultural growth, with the benchmark index closing at 81,967.01 points, up 162.41 points or 0.2%.
Consumer Price Index (CPI)-based inflation dropped to 6.9% year-on-year in September 2024, the lowest since January 2021, down from 9.6% in August, driven by the high base effect, easing commodity and energy markets, and a stable currency, according to the Pakistan Bureau of Statistics (PBS).
Investors also drew strength from Governor State Bank of Pakistan (SBP) Jameel Ahmed’s statement that Pakistan’s foreign exchange reserves surged to cover two months’ worth of imports after the receipt of the first tranche from the International Monetary Fund’s (IMF) 37-month loan deal under the $7 billion Extended Fund Facility (EFF).
In much-needed support for the country’s fiscally-challenged economy, the State Bank of Pakistan (SBP) received the first tranche of $1.03 billion (SDR 760 million) on Monday, September 30, 2024.
Pakistan had been working on implementing conditions deemed “strict” to complete the loan programme agreed to in July, which Prime Minister Shehbaz Sharif time and again hoped would be Pakistan’s last.
The liquid reserves now stand at $10 billion, providing much-needed stability to the country’s foreign exchange position.
“The foreign exchange reserves have stabilised, and we expect further improvements,” Ahmed said speaking at a banking conference.
“[Overseas workers’] remittances have increased, and the supply of dollars has improved,” said Ahmed, noting that a decline in inflation has positively impacted monetary policy.
This is a developing story and is being updated with more details.
