PSX gains over 2,000 points as bullish momentum returns

After a day of profit-taking, bullish momentum surged back at the Pakistan Stock Exchange (PSX) on Wednesday, with the KSE-100 Index climbing over 2,000 points during early trading hours.

The market opened on a strong note, with the index reaching an intra-day high of 111,005.06. By 1 pm, it was trading at 110,749.15, a gain of 1,852.50 points or 1.7%.

Key sectors saw widespread buying, including automobile assemblers, cement, commercial banks, fertilizers, oil and gas exploration, OMCs, refineries, and power generation. Major stocks such as HUBCO, PSO, SSGC, SHELL, ENGRO, MCB, MEBL, HBL, and DGKC traded positively, contributing to the rally.

The buying momentum was driven by improved economic indicators, particularly a drop in the inflation rate to 4.9% in November. This decline has fueled expectations of a policy rate cut in the upcoming Monetary Policy Committee (MPC) meeting.

Additionally, a high-level meeting was held on Tuesday to discuss the Advance-to-Deposit Ratio (ADR) in the banking sector. Participants reviewed the ADR policy’s impact on lending, tax revenue targets, and the banking environment.

The government introduced higher tax rates on banks with ADR below 50% through the Finance Act 2022, aiming to boost commercial lending and tax passive income at a higher rate.