The Pakistan Stock Exchange (PSX) rebounded strongly on Wednesday, with the benchmark KSE-100 Index gaining 1,913.56 points, or 1.76%, to close at a record high of 110,810.21. The bullish momentum followed a day of intense profit-taking, which had pushed the index into the red.
The market opened on a strong note, with the index reaching an intra-day high of 111,012.01 before settling just below that level. The rally was driven by across-the-board buying in key sectors, including automobile assemblers, cement, commercial banks, fertilizer, oil and gas exploration companies, oil marketing companies (OMCs), refineries, and power generation.
Index-heavy stocks such as HUBCO, NRL, PSO, SSGC, SHELL, ENGRO, NBP, MEBL, HBL, and UBL traded in the green, contributing significantly to the market’s gains.
The buying spree was fueled by improved economic indicators, particularly a sharp decline in the inflation rate, which dropped to 4.9% in November. The lower inflation has raised expectations of a further policy rate cut in the upcoming Monetary Policy Committee (MPC) meeting, boosting investor confidence.
In a key development, a high-level meeting was held on Tuesday to address the Advance-to-Deposit Ratio (ADR) in the banking sector. Discussions focused on the impact of ADR policy on lending to productive sectors, tax revenue targets, and creating an optimal environment for the banking sector.
The government, through the Finance Act 2022, had introduced higher tax rates on investment income for banks with an ADR below 50%. This policy aims to encourage commercial lending and tax passive income at higher rates, as it is considered non-productive.
The strong rally on Wednesday came after a volatile session on Tuesday, during which the KSE-100 Index plunged by 1,073.74 points, or 0.98%, to close at 108,896.65. The decline was attributed to profit-taking as investors booked gains on available margins.
