KARACHI: After a day of profit-taking, the Pakistan Stock Exchange (PSX) witnessed a strong return of bullish momentum on Wednesday, with the benchmark KSE-100 Index surging by over 2,100 points in the early hours of trading. By 10:35 am, the index stood at 110,930.46 points, marking a significant recovery.
Key sectors saw broad-based buying activity, including automobile manufacturing, cement, commercial banking, fertilizers, oil and gas exploration, oil marketing companies (OMCs), refineries, and power generation. Major stocks such as HUBCO, PSO, SSGC, SHELL, ENGRO, MCB, MEBL, HBL, and DGKC were all in the green, contributing to the rally.
The surge in market sentiment was largely driven by positive economic indicators, particularly the recent decline in the inflation rate to 4.9% for November. This drop has fueled optimism among investors, with growing expectations for a potential policy rate cut in the upcoming Monetary Policy Committee (MPC) meeting.
A key development that also supported market optimism was a high-level meeting held on Tuesday to discuss the Advance-to-Deposit Ratio (ADR) in the banking sector. Participants analyzed the impact of the ADR policy on commercial lending, tax revenue targets, and the broader banking environment. The Finance Act 2022 had introduced higher tax rates on investment income for banks with an ADR below 50%, a move aimed at boosting lending to productive sectors of the economy.
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Despite the optimism seen on Wednesday, the PSX had experienced a volatile session the previous day. On Tuesday, the KSE-100 Index fell by 1,073.74 points or 0.98%, closing at 108,896.65 points, as investors took profits following a period of market growth.
Globally, Asian stock markets and the dollar paused on Wednesday ahead of a likely rate cut in Canada and a US inflation report, which is expected to keep the Federal Reserve on track for further rate cuts. These global factors are anticipated to continue influencing market sentiment in the days ahead.
The PSX’s strong recovery today reflects renewed investor confidence, with analysts closely monitoring upcoming economic developments, including the MPC meeting and global market trends.
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