KARACHI: Investment commitments from the United Arab Emirates and significant progress on the new IMF bailout programme sent stocks rallying above the 76,000 level intraday. However, the benchmark KSE 100 index on Friday settled shy of this level, but it still closed at a record level despite the drop in trading volume.

Topline Securities Chief Executive Mohammed Sohail said stocks rallied further after the IMF said Pakistan made ‘significant progress’ towards reaching a Staff-Level Agree­ment for a new loan.

Moreover, the UAE’s $10 billion investment commitment in promising economic sectors and the news that Pakistan may sell its stake in Reko Dik to Saudi Arabia also contributed to the weekend rally.

Sohail hoped that the sixth continuous deceleration in short-term inflation, measured by the Sensitive Price Index, would reduce the interest rate in the coming months, boosting investment inflows in the equities.

He said that though the PSX doubled in a year, stock valuations remain attractive as the market is still trading at a low price-to-earnings ratio of 4 to 5.

Answering a question about bullish market performance despite harsh IMF conditions for the next bailout, Ahsan Mehanti of Arif Habib Corporation told Dawn that these conditions would improve the energy sector outlook by resolving circular debt crises.

However, he added that industrial earnings would decrease due to higher energy costs.

“PIA privatisation will be the next trigger for PSX besides expectation of a massive cut in SBP policy rate while new IMF bailout will stabilise foreign exchange reserves in the coming months,” he added.

Explaining other factors boosting the bullish market outlook, he said the proposed higher PSDP allocations in the budget 2024-25 would improve the earnings outlook for the cement, energy, and engineering sectors.

Corporate taxes are expected to remain firm, and the government’s focus would remain on broadening the tax base.

As a result, the benchmark index hit an intraday record high of 76,248.76 and a low of 75,263.06. However, the KSE 100 index settled at a new peak of 75,983.04 points after staging a spectacular rally of 868.56 points or 1.16pc on a day-on-day basis.

Published in Dawn, May 25th, 2024