KARACHI: Bulls dominated the trading floor at the Pakistan Stock Exchange (PSX) for the third consecutive session on Monday, leading the benchmark index to hit another all-time high.

Arif Habib Corporation analyst Ahsan Mehanti said upbeat data on exports and home remittances, along with a fall in bond yields in the latest auction of Pakistan Investment Bonds, triggered the rally that culminated in share prices rising to a record high.

Speaking to Dawn, Alpha Beta Core Ltd CEO Khurram Schehzad said the continuous rise in the KSE-100 index is likely to endure at least in the near future unless a surprise event sets the share price surge back.

Unlikely events that may derail the north-bound journey of the KSE-100 index include the Election Commission of Pakistan failing to hold the general election in February 2024 — a move that’ll surely create uncertainty among investors, said Mr Schehzad.

High remittances amid policy rate cut hopes fuel rally

He attributed the short-term recovery in share prices to the “on track” review of the Stand-by Arrangement (SBA) with the International Monetary Fund (IMF), even though technical and policy level talks have yet to take place. In addition, the announcement of the election date and the expected cuts in the interest rates 2024 onwards have also contributed to positive market sentiments, he said.

However, sustainability in the medium to long term still depends on structural reforms in energy, debt, state-owned enterprises and taxation, he added.

Topline Securities Ltd CEO Mohammed Sohail said the benchmark index crossing the 56,000-point milestone represents a “fast recovery” in the total value of shares from $20 billion to $28bn in less than six months. Yet the PSX remains “one of the smallest markets” with a market capitalisation-to-GDP ratio of less than 10 per cent, he wrote in a social media post.

According to JS Global Capital Ltd, the driving force behind the stock market’s momentum going forward will be the IMF agreement as well as a shift in the holdings from fixed-income funds to equity-based funds by asset management companies, which constitute one of the biggest groups of investors on the PSX.

“We recommend investors should adopt a buy-on-dips strategy in technology, exploration and production and cement sectors,” it added.

The KSE-100 index closed at 56,523.58 points after gaining 1,132.21 points or 2.04pc from the preceding session.

The overall trading volume increased 3pc to 660.6 million shares. The traded value increased 5.9pc to Rs22.4bn on a day-on-day basis.

Stocks contributing significantly to the traded volume included WorldCall Telecom Ltd (100.7m shares), Cnergyico PK Ltd (60.7m shares), Hum Network Ltd (32.4m shares), Pakistan Refinery Ltd (23.8m shares) and the Searle Company Ltd (21.8m shares).

Companies registering the biggest increases in their share prices in absolute terms were Rafhan Maize Products Company Ltd (Rs594.75), Nestle Pakistan Ltd (Rs547.50), Colgate-Palmolive Pakistan Ltd (Rs84.01), Millat Tractors Ltd (Rs36.46) and Pakistan Hotels Developers Ltd (Rs34.83).

Companies registering the biggest decreases in their share prices in absolute terms were Unilever Pakistan Foods Ltd (Rs1,400), Sapphire Fibres Ltd (Rs30), Premier Sugar Mills Ltd (Rs20), ZIL Ltd (Rs19.19) and Pak Suzuki Motor Company Ltd (Rs10.81).

Published in Dawn, November 14th, 2023