KARACHI: After suffering losses in Monday’s trading session, the PSX KSE-100 index rose by nearly 1,200 points within the first few minutes of the trading session on Tuesday due to renewed demand in the stock market. The index was at 179,604.94 points at 9:40 am, up by 1,190.15 points or 0.67%.
The rally was indicative of a change in attitude, as investors returned to the markets only one day after the geopolitical situation caused profit-taking and wiped out all the gains made on the previous day.
Stocks in Energy, Banks, and Cement Sectors Shine
Heavy buying interest was witnessed by several important industry segments, which were behind the rise in the KSE-100 Index, such as automobile assemblers, cement sector, commercial banks, oil & gas exploration, oil marketing, power generation, and refineries. The heavily weighted stocks ended on a positive note, as OGDC, MARI, POL, PPL, HUBCO, ARL, PSO, SSGC, and UBL were among the gainers.
Gains on Tuesday Follow Monday Selloff
Gains witnessed in the PSX KSE-100 index on Tuesday were witnessed after a difficult Monday session when the markets were once again confronted with selling pressures due to new geopolitical events taking place over the weekend. Investors’ sentiment was negative, and hence profit-taking took place causing the index to fall by 1,156.47 points or 0.64% to 178,414.80 points.
This one-time drop erased all gains achieved in the previous session, emphasizing the rapid way that the news on the global political landscape could change investors‘ sentiments at the PSX under the present scenario.
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Setting the Stage with Global Markets
Tuesday’s PSX KSE-100 index climb took place against a mixed stage set by Asian markets amid their strong second-quarter finish. Asian equities were volatile amid the strengthening US dollar, which drove the Japanese yen to its lowest point since the 1980s, setting the stage for a fourth straight quarter of gains.
Japan’s Nikkei stock market index maintained its level in the early morning trading session and was well on its way to posting an unprecedented quarterly increase of 36 percent. South Korea’s stock market, KOSPI, fell by 1 percent but was heading for a remarkable second quarter increase of 65 percent.
Stable Oil Prices amid Receding War Anxiety
Oil prices for Brent futures hovered around their pre-war levels at $72.49 per barrel despite the instability created by the precarious ceasefire agreement. There was considerable fear of war risk premium before but now that the situation has stabilised, those fears have mostly evaporated.
US indexes gained overnight ahead of Tuesday’s opening in the Asian session. The US Dollar appreciated due to a change in its interest rate perspective to a re-pricing from expected cuts to potential rises on strong US economic data and pressure from inflation.
Weakness of Dollar Hits Gold and Yen
The rally of the dollar caused the price of gold to drop by the largest amount in more than 10 years, while the yen fell to a record low of 162.41 per dollar in Asian markets. The weak currency has made traders wary of possible intervention by Japanese policymakers to prevent the currency from weakening even further.
While for the Pakistan Stock Exchange (PSX) investors, the international scenario of strong dollar and change in interest rates makes the rally more complex than ever, the key question will be whether the positive momentum witnessed on the part of domestic buyers will hold up against the international currency and interest rates pressures.
Nayab Fatima is a media professional specializing in fact-based journalism, research, and analytical reporting on technology, telecom, aviation, and automobiles.
