Market participants at the Pakistan Stock Exchange (PSX) displayed resilience in the face of impending budgetary measures, driving the benchmark KSE-100 index to significant gains during Wednesday’s trading session. Despite looming uncertainties surrounding the budget announcement scheduled for the day, the index soared by over 550 points, indicating a notable shift in sentiment within the market.
As the clock struck 2:05 pm, the benchmark index stood at 73,149.33, marking an impressive increase of 559.84 points or 0.77%. This surge came as a surprise to many, particularly considering the apprehensions surrounding the potential impact of the budget on various sectors. Experts attributed this unexpected uptick to a perceived ‘over-reaction’ by investors to rumors and unconfirmed reports, which subsequently created an opportunity for re-entry into the market after it had dipped into oversold territory.
Throughout the trading session, notable buying activity was observed across multiple sectors, with particular interest in automobile assemblers, commercial banks, and oil and gas marketing companies (OMCs). Index-heavy stocks such as OGDC, PPL, PSO, and SHEL also experienced positive movement, further bolstering investor confidence.
Commenting on the market dynamics, Samiullah Tariq, Head of Research and Development at Pakistan Kuwait Investment Company (Private) Limited, stated, “The market has been under concern amid news flow regarding budgetary measures, but they seem to have largely subsided.” This sentiment was echoed by Mohammed Sohail, CEO of Topline Securities, who noted that the market had “over-reacted on tax rumors” pertaining to capital markets.
The anticipation surrounding the budget was palpable, as the incumbent government prepared to unveil its first growth-oriented federal budget for the fiscal year 2024-25, with an estimated outlay exceeding Rs18 trillion. Scheduled for presentation before the National Assembly by Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, this budget announcement carried significant weight, given its potential implications for economic growth and market stability.
Prior to the market surge, Tuesday saw the release of the government’s economic survey, which projected a 2.4% expansion in Pakistan’s economy for the current fiscal year, falling short of the initial target of 3.5%. While this figure represented an improvement from the previous year’s contraction, it underscored the challenges facing the economy amidst ongoing recovery efforts. In alignment with these developments, the State Bank of Pakistan had recently slashed its key interest rate by 150 basis points, signaling a proactive approach to stimulate economic activity.
Against the backdrop of domestic developments, global market dynamics also influenced investor sentiment. Asian shares remained subdued on Wednesday, partly attributed to soft consumer prices in China. Additionally, anticipation mounted ahead of a key US inflation report and the Federal Reserve’s policy decision, which would shape near-term interest rate trajectories. MSCI’s broadest index of Asia-Pacific shares outside Japan experienced a marginal decline, while Japan’s Nikkei registered a modest decrease of 0.8%.
Tuesday’s trading session had seen a mixed performance, characterized by a minor positive start followed by a downturn at the PSX. The benchmark index closed below the 73,000 mark after shedding 663 points, reflecting the market’s sensitivity to both local and international factors.
In summary, the Pakistan Stock Exchange demonstrated resilience amidst uncertainties surrounding the budget announcement, with market participants exhibiting confidence in the face of potential challenges. As the government geared up to unveil its growth-oriented fiscal plan, investor sentiment remained cautiously optimistic, underpinned by expectations of continued economic recovery and prudent policy measures.
