June 14, 2024 (MLN): Pakistan’s benchmark stock index surged by most in two months to a record after the central bank initiated an easing cycle, followed by a tax-heavy budget for 2024-25, aimed at improving chances of securing a new loan program with the International Monetary Fund.

The KSE-100 Index surged 2,953 points or 4% this week to close at an all-time high of 76,707.

Moreover, the government kept the capital gains tax rate unchanged, ending the uncertainty that had caused panic in the market during the previous week.

On the currency front, the Pakistani Rupee recorded a marginal decline of 0.11% WoW. In USD terms, the KSE-100 index gained 3.9% this week.

Throughout the week, KSE-100 traded in a wide range of 4,846 points, between a high of 77,310 (+3,556) and a low of 72,464 (-1,290) points.

PSX average traded volume was recorded at 409.55 million shares worth Rs16.9 billion, marking a decrease of 3.3% WoW in the number of shares and 1.6% WoW in traded value.

Meanwhile, the PSX market capitalization increased by $945.29m or 2.7% to $36.55bn over the week. In PKR terms, market capitalization stood at Rs10.18 trillion.

In a major development, the State Bank of Pakistan (SBP) lowered its key policy rate by 150 basis points to 20.5% on Monday, a bigger margin than expected by market analysts.

The reduction was the first in almost four years and came ahead of the country’s annual budget 2024-25. SBP had kept borrowing costs at a record 22% since June 2023.

Historical data suggests start of a rate-cut cycle bodes well for the local stock market.

Following the first rate cut, KSE-100 index has averaged a 4.4% gain over the next three months and almost 15% over a six-month period, data from the past six easing cycles compiled by Mettis Global show.

Read: SBP’s shift to monetary easing may spark Pakistan stocks surge

On Wednesday, the government presented a tax-heavy budget for 2024-25, aiming to collect 46% higher revenue than last year to increase the chances of securing a new loan program from IMF.

To note, Pakistan is in talks with the IMF for a larger and longer loan, estimated to be about $6-$8bn.

Top Index Movers

Sector-wise, top positive contributors were Commercial Banks (1,449pts), Oil & Gas Exploration Companies (362pts), Fertilizer (328pts), Cement (244pts), and Power Generation & Distribution (181pts).

Contrary to that, negative contributions came from Textile Composite (95pts), Chemical (56pts), Technology & Communication, (9pts), Textile Spinning (3pts), and Sugar & Allied Industries (2pts).

The best-performing stocks during the week were UBL (357pts), MCB (328pts), BAHL (185pts), MEBL (176pts), and BAFL (170pts).

Whereas, ILP, COLG, PTC, KEL, and NBP collectively took away 209 points from the index.

FIPI/LIPI

Foreign investors turned to net sellers during the week, offloading $5.78m worth of equities.

Flow-wise, Mutual funds were the dominant buyers, with a net investment of $11.07m.

They allocated the majority of their capital, $2.59m, to Cement, while divesting from the Food and Personal Care Products sector, amounting to $0.33m in sales.

On the other hand, the leading sellers were Individuals, with a net sale of $8.89m.

Their most substantial sales activity was in Cement, amounting to $2.99m, while they acquired $0.74m of equities in the Oil and Gas Exploration Companies.

The KSE-100 has gained 35,254 points or 85.05% during the fiscal year, whereas the ongoing calendar year has witnessed a cumulative increase of 14,256 points, equivalent to 22.83%.

Copyright Mettis Link News

Posted on: 2024-06-14T20:48:27+05:00