The inventory market prolonged its record-breaking run on Friday, hovering previous the 109,000-point milestone.
The rally was pushed by strong macroeconomic fundamentals, together with a surge in Pakistan’s overseas reserves, a pointy decline in inflation, sturdy market liquidity, and rising optimism forward of the upcoming financial coverage changes.
The Pakistan Stock Exchange’s (PSX) KSE-100 Index surged by 1,239.12 factors, or 1.14%, to hit a brand new intraday excessive of 109,478.08.
This exceptional rally displays every week of speedy development for the PSX, which crossed the 100,000 mark simply seven days in the past.
Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities, stated: “The market’s bullish development is led by chosen scrips within the oil and banking sectors, pushed by speculations forward of the SBP’s key coverage charge announcement subsequent week.”
“The $3 billion Saudi deposit rollover, rupee stability, and upbeat financial indicators have performed a catalytic function on this new report at PSX,” he added.
Pakistan’s complete liquid overseas reserves reached $16.6 billion as of November 29, 2024, based on the State Bank of Pakistan (SBP).
These reserves embody $12 billion held by the SBP, which elevated by $620 million through the week, pushed by an official influx of $500 million from the Asian Development Bank (ADB).
Additionally, the Saudi Fund for Development (SFD) prolonged the time period for a $3 billion deposit maturing on December 5, 2024, by one other yr.
This extension adopted a gathering between Prime Minister Shehbaz Sharif and Saudi Crown Prince Mohammad Bin Salman through the “One Water Summit” in Riyadh.
“Expectations of a 150-200 foundation level charge minimize and elevated liquidity flowing into equities as funds transfer out of fastened revenue are the explanations for the persevering with bullish development,” stated Sana Tawfik, Head of Research at Arif Habib Limited. “Additionally, the market’s low multiples depart room for additional upside.”
Meanwhile, one more reason for the market’s rise is the inflation charge, which dropped to 4.9% in November, its lowest stage since 2017, offering room for additional financial easing. This marks a pointy decline from final yr’s historic excessive of 38% and is properly under the SBP’s goal vary of 5-7%.
Analysts extensively anticipate the SBP to chop rates of interest by at the least 200 foundation factors in its December 16 assembly, which might carry the overall discount to 900 bps since June.
As the PSX approaches the 110,000-point mark, market analysts stay optimistic about continued development.
With strong macroeconomic indicators, rising reserves, and the chance of a major charge minimize, the capital market is positioned for sustained momentum heading into the ultimate weeks of 2024.
