KARACHI: The Pakistan Stock Exchange (PSX) regained bullish momentum a day after it witnessed a very volatile session and closed in a negative zone.
The market’s rally reflected strengthened sentiment with the benchmark KSE-100 Index gaining over 2,000 points during the early hours of trading on Wednesday.
At 10:35am, the benchmark index was hovering around 110,930.46, a rise of 2333.81 points or 1.87 percent.
There was all-round buying in the main sectors like automobile assemblers, cement, commercial banks, fertilizer, oil and gas exploration companies, OMC, refinery, and power generation. Key index heavyweights like HUBCO, PSO, SSGC, SHELL, ENGRO, MCB, MEBL, HBL, and DGKC were in green territory.
The purchases followed an improvement in economic indicators, with the lowest inflation rate in November at 4.9%. The decline in inflation elevated hopes for a further cut in the policy rate during the upcoming Monetary Policy Committee (MPC) meeting.
A high-level meeting is key in relation to dealing with the Advance-to-Deposit Ratio (ADR) in the banking sector held on Tuesday. There have been discussions about the overall lending to productive sectors of the economy concerning the usage of ADR policy, its effect on tax revenue targets, and the optimum environment.
The government introduced higher tax rates on the investment income of banks with an ADR ratio below 50% vide Finance Act 2022. This tax is indirectly aimed at increasing commercial lending and taxing passive incomes at a higher rate being income from non-exertion.
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On Tuesday, PSX saw a highly volatile day where balls moved in both directions but closed in negative territory due to selling pressure as investors made a profit on available margins. The benchmark KSE-100 Index dipped by 1,073.74 points or 0.98% and closed at 108,896.65 points.
