The shares soar at PSX as benchmark KSE-100 crosses 68000 mark.
Pakistan’s stock market soared to yet another all-time high on Wednesday, driven by optimistic economic indicators that have spurred hopes of monetary loosening.
The benchmark KSE-100 index closed at 67,756.03, surging by a significant 869.77 points or 1.30%.
Cyclic Sector Leads the Charge
Investor Interest Focused on Cement and Steel Companies
The cyclic sector stole the spotlight as investors poured funds into cement and steel companies, spurred by reports of increased local and international cement dispatches for March.
Sectors such as transport, technology, communication, and commercial banking also remained on investors’ radar.
Privatization Plans Boost Market Confidence
Government’s Initiative to Sell State-Owned Enterprises Fuels Optimism
Market sentiment received a further boost from the government’s privatization plans, especially its endeavor to sell off State-Owned Enterprises (SOEs).
There is a prevailing consensus that privatization could enhance the profitability and efficiency of these entities, attracting investor interest.
Foreign Investment and Expectations of Rate Cuts
Foreign Portfolio Investment and Anticipation of Lower Interest Rates Drive Market Sentiment
Foreign portfolio investment in government papers, along with expectations of rate cuts in the coming months, have bolstered investor confidence.
Lower interest rates are particularly favorable for sectors like cement, as they could stimulate construction activity.
“Confidence (is) further improving after good progress on privatisation along with foreign portfolio investment in government papers,” said Mohammed Sohail, CEO of brokerage house Topline Securities, in a note during intra-day trading.
“Cements stocks are (also) in limelight amid expectations of rate cut in coming months,” he said.
“As many as 67 stocks rose while 24 fell with Engro (+4.88%), Engro Fertilizer (+3.9%), and Lucky Cement (+4.78%) emerging as the biggest contributors to index gains,” the Brokerage Arif Habib Limited (AHL) in its market wrap said.
“Cement and steel names are positioning themselves to potentially be outperformers in Q2,” the AHL report said.
Pakistan’s consumer price index (CPI) for March 2024 punched in at 20.7% year-on-year, as compared to 23.1% year-on-year in February 2024 and 35.4% year-on-year in March 2023, the latest data issued by the Pakistan Bureau of Statistics (PBS).
In March 2024, the CPI surged by 1.7% compared to a mere 0.03% rise in the previous month and a 3.7% increase in March 2023, marking a notable uptick in inflation. These inflation figures surpassed market forecasts.
CPI Data and Market Response
Consumer Price Index Records Decrease, Surpassing Market Expectations
The Consumer Price Index (CPI) for March 2024 showed a year-on-year decrease, surpassing market forecasts.
Although inflation experienced an uptick, it remained lower than previous months, indicating an improvement in economic conditions.
As shares soar at PSX following benchmark KSE-100 crosses 68000 mark, the convergence of positive economic indicators, government initiatives, and investor optimism has propelled Pakistan’s stock market to unprecedented heights, signaling confidence in the country’s economic prospects.
