Stocks soar to new peak amid economic optimism

Stocks surged to a new record high on Tuesday, boosted by expectations of improved economic conditions following signs of progress in securing financial support from the International Monetary Fund (IMF) and friendly countries, dealers said.

Pakistan Stock Exchange (PSX)’s benchmark KSE-100 index rose 0.74 percent or 463 points to close at 62,956 points, the highest level ever. The index traded in a range of 821 points, touching an intraday high of 63,037 points and a low of 62,215 points.

The trading volume was robust, with 761.8 million shares changing hands, worth Rs30.8 billion. Of the 100 index companies, 47 closed up, 29 closed down, one was unchanged, while 23 remained untraded.

Investors were confident about the outlook for the economy, which has shown some improvement in key indicators such as trade deficit, remittances and exports. The local currency also remained stable and gained for the sixth consecutive session.

"There is a positive sentiment in the market, driven by optimistic expectations of an improved economic landscape," said analyst Naveed Nadeem at Topline Securities. "This positive outlook is supported by anticipated financial inflows from the IMF and friendly countries. Additionally, there is speculation about a potential reduction in interest rates in the upcoming monetary policy committee meeting, further enhancing the positive environment."

The benchmark index was supported by oil & gas exploration companies with 316.82 points, commercial banks with 140.49 points, oil & gas marketing companies with 63.81 points, refinery with 61.63 points, and tobacco with 20.1 points. Companies adding points to the index were PPL with 148.29, OGDC with 121.9, MEBL with 64.79, POL with 33.12, and ATRL with 31.15 points.

The oil and gas sector led the gains as global oil prices rose on hopes of a recovery in demand. Pakistan Petroleum Ltd, Oil and Gas Development Co Ltd and Mari Petroleum Co Ltd were among the top performers, adding 148, 122 and 33 points respectively.

The banking sector also supported the rally as investors expected lower interest rates to boost lending activity and profitability. Meezan Bank Ltd was the biggest contributor, adding 65 points to the index.

Automobile assembler with 72.35 points, cement with 32.4 points, technology & communication with 21.35 points, fertilizer with 17.85 points, and textile composite with 17.53 points contributed negatively.

Some stocks faced profit-taking, dragging the index down by 130 points. Millat Tractors Ltd, Hub Power Co Ltd and Lucky Cement Ltd were the main losers, shedding 65, 32 and 31 points respectively.

The most active stock was Cnergyis Infotech India Pvt Ltd, with 82.3 million shares traded. Analysts said the market outlook remained positive, as the government was taking steps to address the challenges facing the economy and the energy sector.

"Stocks closed at a new all-time high amid upbeat data on oil sales rising by 9 percent month-on-month in November 2023 and speculations ahead of IMF schedule to release the next tranche under the standby arrangement," said analyst Ahsan Mehanti at Arif Habib Corp. "The government's plan to end gas prices disparity for the export sector and rupee stability on strong economic indicators played a catalytic role in the record close at PSX."