KSE-100 Index shatters 54,000 ceiling before profit-taking pushes it back into red
Business
Market believes that the rake hike cycle has ended
KARACHI (Web Desk) – Another landmark was achieved on Tuesday when the Pakistan Stock Exchange crossed the 54,000 mark during early trading but later experienced profit-taking, ending the session in red zone as investors opted for cautious approach.
The early bullish trend in continuation of recent boom was attributed to the interest shown by local investors who are expecting that there won’t be any more rate hikes given a declining inflation and a positive outcome of the ongoing talks with the International Monetary Fund (IMF).
At one point, the benchmark KSE-100 Index had touched 54,312.89 before the selling pressure witnessed across-the-board sent it tumbling to 53,735.73, translating into a net loss of 124.63 points, or 0.23 per cent.
Earlier on Monday, the KSE-100 Index had closed at 53,860.36, thus setting a new high in the Pakistan Stock Exchange’s history, as the cement, fertilizer, banking, and power sectors kept propelling the market.
The reason behind the investors rooting for a successful first review by the IMF of the $3 billion stand-by arrangement is that the privatisation of the state-owned enterprises (SOEs) has been seemingly getting nearer, being one of the main conditions set under the agreement.
Islamabad has already implemented the IMF demands – ranging from hiking the fuel prices to the power and gas tariffs while slashing subsidies – which are meant to reduce fiscal deficit. Thus, the privatisation of loss-making SOEs is naturally the next stage.
On Monday, it was reported that the IMF team had asked the finance ministry to submit latest figures concerning the losses suffered by the SOEs after rejecting the older data provided by the Pakistani officials – meaning that the world’s top lender wants an early disposal of these entities.
Meanwhile, other factors have also contributed to the prevailing trend visible in the stock market – improved macroeconomic indicators [reduced fiscal deficit and others], the steps taken to control smuggling by regulating the Afghan Transit Trade and the strong performance shown by the agriculture sector, including bumper rice and cotton crops.
As far as the stock market’s history is concerned, it had touched 53,127 – which remained the highest level till last week – in May 2017. But by March 26, 2020, the KSE-100 Index had nosedived to 27,267 during the PTI government – a period during which the seeds of the current economic mess were sown, with the later period saw some recovery.
However, the things started moving in the right direction when it appeared the IMF deal was coming. So the benchmark index, which was recorded at 40,152.05 on June 22 this year, has now surged by over 13,500 points since then.
