KSE-100 Index Rises on Economic Optimism

Continuing its upward momentum from last week, the Pakistan equity market opened on a positive note on Monday, buoyed by a favorable economic outlook due to rising exports and surging remittances. The KSE-100 index, the benchmark for the Pakistan Stock Exchange (PSX), gained 158 points (0.2 per cent), closing at 79,491 points despite intraday volatility.

The index started strong with bullish sentiment but saw some profit-taking in the latter half of the session, hitting an intraday low of 79,368 points. However, the market closed in positive territory, reflecting the ongoing optimism in the market.

Key Drivers Behind the Market Surge

Several factors played a key role in driving the gains in the KSE-100 index:

• Rising Exports and Remittances: Increased inflows from exports and remittances provided a strong base for the optimistic outlook.
• Anticipated IMF Deal: Investors are eagerly awaiting the approval of a $7 billion IMF Extended Fund Facility (EFF) on September 25, which is expected to provide further support to Pakistan's economic recovery.
• Stronger Rupee and Lower Leverage Costs: A stronger rupee, coupled with falling leverage costs, also contributed to positive investor sentiment.

In addition to these domestic factors, global economic trends played a role, as US and European markets remained mixed due to investor caution ahead of the US Federal Reserve's first interest-rate cut since 2020.

Global Market Trends

Globally, stock markets showed mixed performance on Monday. In the US, the Dow saw slight gains while the S&P 500 and Nasdaq showed a dip in late-morning trading. European markets had a similar story, with London closing marginally higher, but continental exchanges like Germany and France showed slight losses as investors waited for economic cues from the US Federal Reserve.

Performance of Major Stocks

Several major stocks influenced the overall mixed performance in the PSX:

• Downside Contributors: Stocks like Meezan Bank Limited (MEBL), D.G. Khan Cement (DGKC), United Bank Limited (UBL), Engro Corporation (ENGRO), and Oil and Gas Development Company (OGDC) collectively pulled the index down by 126 points.
• Upside Contributors: On the other hand, Mari Petroleum (MARI), Hub Power Company (HUBC), and Engro Fertilizers (EFERT) attracted buying interest, collectively adding 373 points to the index.

Overall, over 535 million shares were traded on Monday, with Pace Pakistan Limited (PACE) leading the volume chart, trading over 56.8 million shares. The total market value of shares traded was Rs8.9 billion.

Investor Outlook

According to Ahsan Mehanti of Arif Habib Corporation, “Stocks closed higher amid an upbeat economic outlook driven by rising exports, surging remittances, and expectations of a favorable IMF deal.” Mehanti also pointed to the stronger rupee and declining leverage costs as key drivers of market gains.

While the market shows resilience, investors are advised to remain cautious, as global economic conditions, such as upcoming decisions from the US Federal Reserve, could impact future performance.

Conclusion

The stock market in Pakistan ended the day on a positive note, reflecting the ongoing economic optimism supported by rising exports and remittances. While the market experienced some volatility, the anticipation of the IMF deal and favorable domestic conditions played a significant role in its gains. Global markets remain mixed, with investors awaiting key decisions from the US Federal Reserve. For investors, staying informed and monitoring economic indicators will be crucial in navigating future market trends.

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