Pakistan Stock Exchange (PSX) experienced a tumultuous week, marked by historic highs and lows as profit-taking, policy changes and economic indicators stirred market sentiment.
The State Bank of Pakistan's (SBP) decision to cut its policy rate by 200 basis points (bps) to 13% initially fueled investor optimism, propelling the KSE-100 index higher by 1,867 points on Monday. However, the rally proved short-lived as mutual fund redemptions, year-end profit-taking and stringent tax policy worries triggered market correction mid-week. On a day-on-day basis, the PSX at the start of the week witnessed a remarkable surge, driven by bullish sentiment and investor optimism. Stocks across various sectors rallied as investors anticipated a significant rate cut by the SBP, fuelled by low inflation and a decrease in short-term government bond yields to 11.99%.
The following day, the bourse faced a bearish session amid volatility and policy concerns, with the KSE-100 index experiencing significant swings. By the close, the index settled with a decline of 1,309 points.
On Wednesday, the PSX suffered an unprecedented crash, plummeting 3,790 points – its biggest single-day drop in history. This dramatic plunge sent shockwaves through the market, as massive sell-offs across key sectors triggered a sharp reversal in sentiment. Next day, the market witnessed further massive selling, causing equities to spiral into a correction phase. It was a day marked by ruthless sell-off, where over 4,700 points were wiped off owing to profit-taking amid stringent tax policy concerns.
However, the bourse made a strong comeback on the last day of the week, when investors showed renewed confidence in market resilience and pushed the KSE-100 index up by 3,238 points to 109,513.
It came in the wake of government's deliberations on the privatisation of state-owned enterprises (SOEs), resolution of independent power producers' (IPPs) capacity payment issue, surging exports, rising foreign exchange reserves and rupee stability.
Overall, the market dropped 4,789 points, or 4.19% week-on-week (WoW), and closed at 109,513.
AHL wrote in its weekly review that the stock market witnessed a correction. The week commenced on a positive note with the SBP announcing a 200bps rate cut to 13%. Additionally, the country reported its highest current account surplus in a decade, amounting to $729 million for November 2024, a notable turnaround from the $148 million deficit recorded in November 2023.
However, from Wednesday onwards, the market experienced a significant downturn, with two consecutive historic single-day declines of 3,700 points and 4,800 points, primarily driven by mutual fund redemptions and year-end profit-taking by institutional investors. Despite this, the market showed signs of recovery on the final day, closing the index at 109,513. Meanwhile, Pakistan Investment Bonds' (PIBs) cut-off yields across various tenors decreased 4-55 bps. On a positive note, the SBP's reserves increased $31 million to $12.1 billion.
At the week's close, the Pakistani rupee stood at 278.42 against the US dollar, reflecting a modest depreciation of 0.08% WoW.
Sector-wise, negative contributions came from oil and gas exploration (1,305 points), fertiliser (1,119 points), cement (798 points), commercial banks (446 points) and technology & communication (252 points).
Meanwhile, the sectors that contributed positively were oil marketing companies (113 points), cable & electrical goods (72 points) and power (57 points). Foreigners' selling continued during the week under review, which came in at $11.6 million compared to net selling of $0.9 million last week.
Major selling was witnessed in exploration and production companies ($5.5 million), followed by banks ($4.3 million). On the local front, buying was reported by individuals ($25.8 million) and banks/DFIs ($10.5 million). Average daily volumes arrived at 1,192 million shares (down 19.1% WoW) while average traded value settled at $218 million (up 10.2%).
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