Steady fall in bond yields, shift of investors from fixed income to equities, driving market upwards, says analyst
\n Karachi
\nThe capital market on Monday carried over last week\u2019s high momentum, motored by a mix of robust economic indicators \u2014 particularly a steady fall in inflation \u2014 and hopes of strong earnings in the upcoming corporate results, leading investors to lock in value stocks. The Pakistan Stock Exchange\u2019s (PSX) benchmark KSE-100 Index on Monday surged by 1,917.62 points or 1.89% to reach a new high of 103,274.94, compared to the previous close of 101,357.32 points. \u201cThe positive momentum observed since last week and even earlier continues, supported by improving macroeconomic factors,\u201d said Sana Tawfik, Head of Research at Arif Habib Limited.
\n\u201cWith inflation expected to hit its lowest level since April 2018, we expect it to be around 4.7%, and improved market liquidity, all factors are boosting the market\u2019s performance,\u201d she added.
\nOne of the developments bolstering market sentiment was the receipt of $500 million from the Asian Development Bank (ADB) as part of the Climate Change and Disaster Resilience Enhancement Program. This inflow has strengthened Pakistan\u2019s foreign exchange reserves, pushing them close to the $12 billion mark. Analysts view this as a pivotal factor in reducing economic uncertainty and enhancing investor optimism. Arif Habib Limited (AHL) in a report said the daily traded volume increased by 70% day-on-day to 1.554 billion shares \u2014 the highest since December 18, 2023, when 1.89 billion shares were traded on PSX.
\nSectoral performance has been key to the index\u2019s climb, with commercial banks leading the charge by contributing 1,675 points last week.
\nThe removal of the Minimum Deposit Rate (MDR) requirement for corporate deposits further buoyed the banking sector, which has continued to attract substantial investor interest. Technology and communication, oil and gas exploration, and property sectors also posted robust gains last week, reflecting broader market participation. \u201cConsistent decline in yields and movement of investors from fixed income to equities is pumping the market up,\u201d noted Samiullah Tariq, Head of Research at Pak-Kuwait Investment Company.
\nMarket analysts credit the rally to the government\u2019s decisive economic reforms and a brighter inflation outlook, with projections suggesting inflation could drop to 5.6%-6.5% by December.
\nThis development has raised expectations that it could lead to a further interest rate cut by the State Bank of Pakistan (SBP), bolstering investors\u2019 confidence.
\nLower inflation expectations, coupled with a significant interest rate cut by the SBP earlier in November, have created a favourable environment for equity markets.
\nThe average daily traded value on the ready counter rose by 7.1% week-on-week, reaching Rs36.85 billion, while foreign investors withdrew $15.1 million, countered by strong buying from local insurance companies.
\nToday\u2019s rise follows the index surpassing the unprecedented 100,000-point mark last week, closing at its then-highest level of 101,357.32 on Friday.
\nThe outgoing week saw the market surge by 3,559.09 points on a weekly basis, driven by a combination of local investor enthusiasm and institutional support.
\nDespite dips, the market recovered strongly, showcasing resilience amidst political volatility and a favourable regulatory environment.
\nAs the PSX continues to push into uncharted territory, the outlook remains optimistic.
\nAnalysts believe that consistent policy support, stabilised external accounts, and reduced costs of doing business will sustain the market\u2019s upward trajectory.<\/p>\n","protected":false},"excerpt":{"rendered":"
Steady fall in bond yields, shift of investors from fixed income to equities, driving market upwards, says analyst Karachi The capital market on Monday carried over last week\u2019s high momentum, motored by a mix of robust economic indicators \u2014 particularly a steady fall in inflation \u2014 and hopes of strong earnings in the upcoming corporate […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-447083","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n