Bulls regained their control over the Pakistan Stock Exchange (PSX) on Thursday as shares surged more than 800 points in intraday trade, after a bearish spell the day before.
The benchmark KSE-100 index climbed 813.83 points, 0.85 per cent, to stand at 96,360.28 from the previous close of 95,546.45 points at 12:19pm.
Yousuf M. Farooq, director research at Chase Securities, said, “The market rally today has been driven by lower PIB [Pakistan Investment Bonds] yields, as funds, insurance companies, and individual investors gradually shift from fixed income instruments to equity.”
He observed that the market had opened “with some jitters following yesterday’s pause, due to ongoing political noise and concerns about the situation in Islamabad on the 24th, which continues to pose a significant risk”.
“Investors should assess their liquidity needs before investing in stocks and ensure they are investing in companies they understand,” he recommended.
Farooq highlighted that the country’s macroeconomic indicators had improved — with inflation expected to be between 5pc to 6pc in November, which has also raised market expectations of another rate cut.
“Mutual funds are proactively calling investors to encourage withdrawals from cash funds, while banks are discouraging PLS (Profit and Loss Sharing) accounts, potentially redirecting some of these flows into the stock market,” he said.
Previously, analysts have observed that stocks were no longer as cheap as they were last year but remained reasonably priced, propelled by stabilising macroeconomic conditions.
“This has been a key driver of the ongoing rally, which is likely to continue with periodic corrections along the way,” analysts predicted.
However, they still warn that major risks to the momentum included “political instability, macroeconomic shocks, excessive government spending, and a deteriorating current account position”.
More to follow
