Market gains 123 points as banks come to rescue PSX

KARACHI: Pakistan Stock Exchange (PSX) turned positive in another low-volume session on Tuesday, with the benchmark KSE-100 Index gaining 122.77 points (+0.16 percent) to close at 75,206.77 points.
The market opened on a positive note but turned to profit-taking soon and hit the day’s low within the first 15 minutes of the session. However, the market stabilized later and remained in the green for the rest of the session. The main sector that supported the market throughout the session remained the banking sector.
“The benchmark index ended the day on a positive note, mainly propelled by banks contributing 275 points to the index, and sustained foreign buying,” brokerage house Ismail Iqbal Securities said in its post-market report. Other than commercial banks, technology & communication and automobile assembler sectors were also positive contributors, according to the brokerage house. Meanwhile, E&Ps, fertilizer, cement, and power closed in the red, it added.
The market’s historic bull run, which started last year with the International Monetary Fund (IMF) loan deal, has been further fueled amid strong foreign buying spree, renewed bets for interest rate cuts due to improvement in economic conditions, and official talks for a new IMF program. In the current fiscal year, foreign buying has amounted to around $145 million, as against an outflow of $5.5 million in the same period last year. The benchmark KSE-100 index has surged by 82.56 percent during the last one year and 16.31 during the current year.
Two brokerage houses have said they see CPI-based inflation reading to post a steep decline, and hover around 13-14 percent in May 2024. “May CPI is expected to clock in at 13.8 percent, significantly lower than recent months due to high base effect from last year and consecutive MoM declines,” said JS Global, a brokerage house, in a report on Tuesday. The decline is primarily driven by lower food inflation, it said.
Similarly, Ismail Iqbal Securities, another brokerage house, in its separate report projected inflation reading to hit 13.1 percent in May. “On MoM basis, inflation is estimated to decrease at 2.1%. The decline on MoM basis is mainly due to decline in food inflation i.e. 5.6% (major decline in wheat/chicken/fresh fruits/onions/tomatoes) and downward FCA adjustment (1.8%) and high base effect,” it said.
Pakistan’s headline inflation clocked in at 17.3 percent on a year-on-year basis in April, lower than the reading in March when it stood at 20.7 percent. -TLTP