Records tumble, KSE-100 breaches 156,000 level in early trade

The historic rally continued unabated at the Pakistan Stock Exchange (PSX), with the benchmark KSE-100 Index crossing the 156,000 level for the first time in history during the opening minutes of trading on Monday.

At 10:40am, the benchmark index was hovering at 155,862.70, an increase of 1,585.51 points or 1.03%.

During trading, the KSE-100 hit an intra-day of 156,080.79.

Buying interest was observed in key sectors including cement, commercial banks, oil and gas exploration companies, OMCs and power generation. Index-heavy stocks, including HUBCO, MARI, OGDC, PPL, POL, SSGC, SNGPL, DGKC, LUCK, HBL, MCB and MEBL traded in the green.

Despite the devastation in agriculture caused by the ongoing floods, buying interest has been observed in sectors tied to reconstruction and recovery, particularly cement, banking, and energy. Analysts believe that the anticipated demand for cement in rehabilitation projects is driving the rally in the cement sector.

“On the monetary front, the State Bank of Pakistan (SBP) is expected to maintain the status quo in its upcoming policy announcement,” Sana Tawfik, Head of Research at Arif Habib Limit, told Business Recorder, as food inflation is projected to rise

Meanwhile, the energy sector has attracted renewed investor attention, fueled by media reports suggesting progress on resolving the long-standing circular debt issue, she said.

“Easing inflationary pressures in August supports a case for a rate cut,” said the Bank of Punjab in its daily insight on Monday.

“However, markets anticipate SBP to exercise caution given the potential inflation uptick due to flood-related damages. Early indications of rising food prices are already evident, with the weekly SPI showing a 5% year-on-year increase.”

According to a statement issued by the Prime Minister’s Office (PMO), Prime Minister Shahbaz Sharif expressed satisfaction over PSX crossing the 156,000-point level.

“The PSX crossing this historic level is a reflection of the business community’s and investors’ confidence in the government’s policies,” said PM.

He also highlighted that Pakistan recently inked agreements and memorandums of understanding (MoUs) worth billions of dollars with Chinese private companies.

“Increased investment in the country will set up industries, increase exports and create more employment opportunities,” he said.

During the previous week, the PSX sustained its record-setting advance, with the benchmark KSE-100 Index climbing 3.8% or 5,659 points, to an unprecedented close at 154,277 points.

This marked the fourth-highest weekly finish of the year, driven by strong local investor appetite, optimism surrounding the Prime Minister’s China visit, and supportive macroeconomic developments, even as foreign selling persisted.

Internationally, stocks rose and the US dollar wobbled on Monday after dismal US labour data sealed the case for an interest rate cut this month, while the yen fell as investors girded for uncertainty in Japan following the resignation of Prime Minister Shigeru Ishiba.

Much of the focus last week was on elevated long-end bond yields across the globe as investors fretted about the state of various countries’ finances from Britain and France to Japan.

Some of those worries could return after Japan’s Ishiba resigned on Sunday, leading to political uncertainty in the world’s fourth-largest economy and clouding the policy path for the Bank of Japan.

The spotlight will be on who replaces Ishiba, with investors fretting that an advocate of looser fiscal and monetary policy, such as Liberal Democratic Party veteran Sanae Takaichi, who has criticised the BOJ’s interest rate hikes, could take the helm next.

The yen fell across the board and was last 0.6% lower at 148.39 per dollar, while the Nikkei surged 1.8%, just shy of its recent record-high.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.4% higher. Blue-chip China stocks rose 0.3% in early trading while Hong Kong’s Hang Seng index gained 0.35%.

US stocks closed slightly lower on Friday, with the Dow shedding almost half a percent, the S&P 500 dipping about a third of a percent, and the Nasdaq ending roughly flat.

This is an intra-day update