The PSX hits 800 points after political clarity

On Monday, stocks surged past 86,000 points as investors swooped on index-heavy names to make the most of earnings season after the 26th Amendment ended weeks of political uncertainty.

As a result of a marathon session, the parliament approved changes to the constitution, giving lawmakers the power to choose the chief justice. This move drew sharp criticism from opposition parties, who said it was subverting the judiciary.

KSE-100 Shares Index, the benchmark on the Pakistan Stock Exchange (PSX), surged 807.42 points or 0.95% to end at 86,172 points, up from 85,250.09 points the previous session, and after hitting 86,172.79 points early.

The 445 active stocks gained 269, retreated 124, and remained unchanged 52. On Friday, the turnover was 323.9 million, but on Saturday it was 474.9 million.

Automobiles, cement, chemicals, commercial banks, fertiliser, oil and gas exploration companies, oil marketing companies (OMCs), and refineries dominated the news.

The biggest index gainers were Millat Tractors (MTL), United Bank Limited (UBL), and Attock Refinery Limited (ATRL).

After the parliament passed constitutional amendments, stocks recovered sharply, according to Arif Habib Corp analyst Ahsan Mehanti.

The PSX was boosted by earnings season speculation and easing lending rates, Mehanti said.

In the first quarter (1QFY2024), corporate earnings are expected to be robust, and bullish investors are taking positions in high-value stocks.

The top stocks on investors’ shopping lists were Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL), Habib Bank Limited (HBL), National Bank of Pakistan (NBP), Engro Fertilizers (EFERT), and Hub Power Company (HUBCO).

Among the reasons for today’s rally is the renewed political clarity, which indicates that investor sentiment has been positively impacted by stability in governance.

Investors wanted more clarity on the political outlook. Upon the successful enactment of the constitutional amendment, they expanded their positions, hoping the economy would stabilize further after the newfound political stability.

According to Alpha Beta Core’s CEO, Khurram Shehzad, the bull run was a result of investors’ confidence being restored, thanks to the successful Shanghai Cooperation Organization (SCO) summit, the IMF loan deal, low inflation, and high expectations from the central bank for rate cuts.

Earlier this month, the State Bank of Pakistan (SBP) cut its key policy rate by 200 basis points to 17.5% from 19.5%, as inflation fell to its lowest level in nearly three years.

The stock market has been mostly steady or positive since the IMF approved Pakistan’s $7 billion bailout deal.

However, the IMF says the new program’s success depends on “sound policies and reforms” aimed at strengthening macroeconomic stability and tackling structural challenges, along with “continued strong financial support” from Pakistan’s development partners.