The Pakistan Stock Exchange (PSX) saw another day of impressive rise, with the benchmark KSE-100 Index surging by nearly 1,250 points during intra-day trading on Monday. By 3:30 pm, the KSE-100 stood at 92,105.87, up 1,246.02 points, or 1.37%. The index hit an intra-day peak of 92,159.08 as investor sentiment remained high.
Key Sectors Drive Gains
Key sectors like automobile assemblers, cement, chemicals, commercial banks, fertilizer, and oil and gas exploration companies witnessed strong buying interest. Heavyweight stocks such as OGDC, PPL, SNGP, SSGC, and HCAR saw a positive trend, adding to the momentum. This wave of buying is fueled by investor expectations of another cut in the key policy rate, with the State Bank of Pakistan’s Monetary Policy Committee (MPC) meeting set for later in the day.
Corporate Earnings and Economic Data Boost Optimism
Investor optimism is also being fueled by positive corporate earnings and improving economic indicators. A highlight of the recent economic data is Pakistan’s record-breaking quarterly budget surplus of Rs1.7 trillion during the first quarter of FY25, marking the first such surplus in over 20 years. However, there are some reservations about whether tax authorities can sustain this trend, with concerns that tax targets may still be missed despite the surplus.
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Last Week’s Strong Performance
The PSX experienced a bullish trend last week as well, driven by investor confidence in the blue-chip oil and gas sector. By the week’s close, the KSE-100 index had gained 865.88 points, ending at 90,859.85. Investors remain upbeat about Pakistan’s economic outlook, particularly with the prospect of a rate cut that could further support growth.
Global Market Movements
The optimism in Pakistan’s market coincides with positive trends in some global markets. In South Korea, the KOSPI index rose 1.54% to 2,581.60 as of early Monday morning. This rise follows the announcement from South Korea’s opposition Democratic Party leader, who pledged support for scrapping a scheme to tax stock investment profits. This move led to a strengthening of the won and a rise in benchmark bond yields.
Similarly, Australian markets rebounded after a three-day losing streak. The S&P/ASX 200 index inched up by 0.3% to 8,138.9 by 11:33 GMT on Monday, as investors awaited guidance from the central bank’s upcoming policy meeting. The Australian benchmark had seen its worst weekly performance in nearly three months last week, dropping by 1.1%.
Outlook for PSX
With the MPC’s meeting results expected soon, analysts predict that a potential policy rate cut could sustain or even boost the buying momentum in the PSX. If the anticipated rate cut materializes, it could ease financing costs for businesses, encouraging more investments. Some experts, however, remain cautious, pointing to the challenges in achieving sustained economic growth and meeting tax revenue targets.
The PSX’s recent performance underscores a renewed optimism in Pakistan’s economy, driven by supportive policies, improved fiscal metrics, and strong corporate earnings. As investors await the MPC’s decision, the market outlook remains positive, with further gains anticipated if economic conditions continue to stabilize.
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