The Pakistan Stock Exchange (PSX) has experienced an extraordinary rally, with the benchmark KSE-100 index gaining 14,480 points, equivalent to a remarkable 15.31%, over eight consecutive trading sessions. This record-breaking surge has made global headlines, placing PSX among the world’s best-performing markets based on USD returns.
The rally began on November 27, 2024, following a dramatic single-day drop on November 26, when the index closed at 94,574 points. The dismantling of Pakistan Tehreek-e-Insaf (PTI) protests by the government acted as a catalyst, instilling confidence in investors and propelling the index to a closing high of 109,054 points on December 6, 2024.
Key Drivers of the Rally
Improved Economic Indicators
The rally was fueled by encouraging inflation data, which fell to 4.9%—the lowest since April 2018. Saudi Arabia’s extension of a $3 billion deposit to Pakistan for another year provided much-needed economic stability. Additionally, seven out of 37 Memorandums of Understanding (MoUs) signed with Saudi Arabia were converted into formal contracts worth $560 million.
Sectoral Contributions
Key sectors driving the rally included:
1. Fertilizer (+1,748 points)
2. Commercial Banks (+1,434 points)
3. Oil & Gas Exploration (+1,148 points)
4. Cement (+716 points)
5. Power Generation (+405 points)
Major individual contributors were MARI (+866 points), ENGRO (+626 points), and UBL (+570 points). Meanwhile, minor negative contributions came from HBL (-131 points) and JVDC (-20 points).
Market Optimism
Analysts at Arif Habib Limited foresee continued positive momentum in the coming week, buoyed by speculation of a rate cut in the upcoming Monetary Policy Committee meeting on December 16, 2024. The KSE-100 index is currently trading at a Price-to-Earnings Ratio (PER) of 5.9x (2025), significantly below its 10-year average of 8.3x, offering an attractive dividend yield of approximately 8.2%.
Record Volumes and Foreign Activity
KSE-100 witnessed record-breaking average volumes of 1,683 million shares, up 72% week-on-week (WoW), with an average traded value of $198 million, up 49% WoW. While foreign investors sold equities worth $12.2 million, local buyers, particularly funds ($39.6 million), offset this trend, reflecting strong domestic confidence.
Additional Highlights
• The government raised PKR 353 billion through an auction of Ijarah Sukuk bonds.
• Petroleum sales hit a 25-month high of 1.58 million tons in November 2024, up 15% YoY, while cement dispatches rose 6% YoY to 4.15 million tons.
• State Bank of Pakistan’s reserves climbed $620 million week-on-week to $12 billion, supported by a $500 million loan from the Asian Development Bank.
Broader Implications
The KSE-100’s stellar performance underscores investor optimism amid improving macroeconomic fundamentals. With upcoming monetary policy announcements and stable foreign reserves, the index is poised to sustain its bullish trajectory, attracting both local and international investors.
