During the early hours of trading on Tuesday, the Pakistan Stock Exchange (PSX) reached a new all-time high and surpassed the psychological barrier of 54,000, amid the ongoing ‘timely’ IMF review of the domestic economy under its $3 billion loan program.
Later in the day, however, it fell below the profit-selling barrier.
Rupee Fell Against USD
The domestic currency, on the other hand, fell to a five-week low of Rs. 287 against the US dollar in the inter-bank market as Pakistan and the IMF discussed ways to raise new foreign financing to cover the shortfall in the current fiscal year 2023-24.
PSX Benchmark KSE-100 Index Crossed 54,000 Points
The PSX benchmark KSE-100 Index reached a new high of 54,313 points, up nearly 450 points or 1%. On Monday, the index closed at 53,860 points.
However, intraday gains were limited to 133 points, with the benchmark index falling below 54,000 points at around 1:55pm. The correction occurred during intraday profit selling.
IMF Talks and Its Impact
Before the intraday correction, former Ministry of Finance official Dr. Khaqan Haasan Najeeb said in a brief comment “IMF talks and early signs of growth in agriculture and large scale manufacturing (LSM) helped to maintain the momentum at PSX, as the index takes above 54,000 points.”
Topline Securities CEO Muhammad Sohail stated that, “Due to the timely IMF review, the international body is highly likely to approve the release of the next loan tranche of $700 million soon.”
The tranche would boost the country’s foreign exchange reserves while also addressing some of the rising demand for the US dollar.
Investing Opportunities
Sohail stated that despite the index reaching a new high, stock valuations remain attractive, with share prices trading at a price-to-earnings (PE) ratio of four these days, compared to the usual seven to eight multiples. Many investors are enticed to buy stocks because of the high share prices.
The rupee, on the other hand, continued its downward trend on the twelfth consecutive working day, reaching a five-week low of Rs. 287 against the US dollar around midday due to increased demand for the foreign currency.
The local currency fell by Rs. 1.71 in intraday trading to Rs. 287 from Monday’s close of Rs. 285.29.
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