In powerful rebound, PSX surges 7,200 points

Easing US-Iran tensions, oil price retreat and monetary policy boost investor interest

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KARACHI:

Pakistan Stock Exchange (PSX) on Monday made a powerful comeback as the KSE-100 index surged over 7,200 points, driven by easing US-Iran tensions that lifted global risk appetite, a sharp retreat in oil prices and growing investor confidence that the State Bank of Pakistan (SBP) would keep its policy rate unchanged at 11.5%.

The benchmark index climbed 7,241.13 points, or 4.23%, to settle at 178,262.34. It extended gains in the latter half of the session as expectations of maintaining the status quo in monetary policy strengthened. In early trading, the index soared more than 5,000 points, touching 176,392.61 by midday. It hit the intra-day high of 178,588.34 and low of 175,153.17.

Notable activity was seen in key sectors such as auto assemblers, cement, commercial banks, oil and gas exploration, oil marketing companies and power generation.

"Investor sentiment turned positive after the US and Iran agreed to halt strikes, raising hopes for the resumption of shipping traffic through the Strait of Hormuz," AKD Securities Director Research Mohammed Awais Ashraf told The Express Tribune. Additionally, the easing geopolitical tensions boosted expectations that the monetary policy would be left unchanged.

Ahmed Sheraz of KASB KTrade said the market staged a broad-based rally that exceeded expectations, as investor sentiment improved sharply following an uneventful weekend in the Middle East. "With no fresh escalation between the US and Iran and an apparent ceasefire in place, confidence returned to the market," he said, adding that Brent crude opened lower and traded near $88 a barrel, soothing concerns over energy prices and providing support to equities.

Gains were broad-based across commercial banks, cement, oil and gas and fertiliser sectors where major contributors were United Bank, Engro Holdings, Fauji Fertiliser, Meezan Bank, Lucky Cement, Hub Power, Habib Bank and Pakistan Petroleum.

Sheraz mentioned that the SBP's decision to keep the policy rate unchanged at 11.5% further supported investor confidence, signalling that the recent oil price volatility was unlikely to create sustained inflationary pressures in the near term.

Arif Habib Limited (AHL) Deputy Head of Trading Ali Najib wrote that the market witnessed broad-based buying as investor sentiment improved following the suspension of airstrikes between the US and Iran, raising hopes for a diplomatic solution to the conflict and the resumption of shipping through the Strait of Hormuz. The easing tensions significantly boosted risk appetite across the market.

On the macro front, the SBP maintained its policy rate at 11.5%, balancing inflationary risks stemming from geopolitical developments against improving economic conditions and the recent rating upgrade. UBL, Engro Holdings, Fauji Fertiliser, Meezan Bank, Lucky Cement, Hub Power, HBL, Pakistan Petroleum, OGDC and NBP collectively contributed 4,129 points to the benchmark index.

Going forward, sustained calm on the geopolitical front, coupled with improving macroeconomic fundamentals and the ongoing corporate earnings season, could support the continuation of the market's recovery. However, developments in the Middle East and global oil prices would remain key near-term catalysts, Najib added.

Overall trading volumes increased to 1.03 billion shares compared with Friday's total of 579.9 million. The value of traded shares stood at Rs41 billion.

Shares of 496 companies were traded. Of these, 409 stocks rose, 63 dropped and 24 remained unchanged.

WorldCall Telecom was the volume leader with trading in 135.9 million shares, rising Rs0.03 to close at Rs1.26. During the day, foreign investors sold shares worth Rs1.05 billion, the National Clearing Company reported.