PSX rebounds as Pak-India tensions ease, interest rates expected to fall

The Pakistan Stock Exchange (PSX) has recorded a respectable bull run as the benchmark index of the exchange, the KSE-100, witnessed an early rally that maintained its momentum throughout the day. According to reports, the rebound was driven by a surge in investor confidence amid signs that tensions between Pakistan and India may soon de-escalate.

The US State Department revealed that Secretary of State Marco Rubio was in contact with both Prime Minister Shehbaz Sharif and Indian Foreign Minister Subrahmanyam Jaishankar on Wednesday to smooth things over between both nuclear-armed nations. With Thursday, May 1 being a public holiday marking Labour Day, trading at the PSX remained suspended; however, the effects of the de-escalation were felt on Friday.  

The KSE-100 index hit an intraday low of 112,820.07 points at approximately 9:38 AM, after which bullish sentiments took hold of the market, causing the index to rally to an intraday high of 114,546.87 points.

However, a marginal drop was witnessed in the index before trading hours ended, causing it to close the day at a respectable 114,113.93 points. For reference, the KSE-100 closed at 111,326.57 points on Wednesday, after which the index recorded a growth of 2.50 percent during trading hours on Friday, allowing for a staggering 2,787.36 point rise. 

Every single index remained in the green with the All-share index (ALLSHR) experiencing a 2.18 percent growth rate, which translates into a 1,516.25 point gain for the index. Unlike the KSE-100, which tracks the performance of the 100 largest and most liquid companies, the ALLSHR index records the performance of all publicly listed companies on the PSX.

The PSX has displayed great average returns for its investors over the past year, and with the International Monetary Fund’s (IMF) board approval scheduled for May 9, indexes on the exchange continue to climb. 

Moreover, investors expect a policy rate cut ranging from 50 basis points (bps) to 100 bps. A drop in interest rates could allow investors to pour in a greater amount of funds into the domestic capital market, owing to lower rates offered by local financial markets.

Data from the PSX reveals that the ALLSHR index has shot up by a staggering 53.71 percent over just one year, with the KSE-100 recording an even greater rise of 61.50 percent over a one-year period – a growth rate which many would categorise as nothing short of meteoric.

A vast array of companies witnessed a rise in share prices with Kohinoor Power Company Limited (KOHP) and Dewan Mushtaq Textile Mills Limited (DMTM) winning big during trading hours, to the tune of growth rates that sat at 16.07 percent (KOHP) and 14.37 percent (DMTM). 

However, not every publicly listed stock witnessed an improvement, as many companies witnessed sharp declines. Of these declining companies, the one that fared the worst during intra-day trading was The Pakistan General Insurance Co. Ltd (PKGI), which posted a 10.07 percent decline in its position.

Trading volume of regular stocks stood at an impressive 372,363,708 shares, translating into a total value of over 23.2 billion rupees.