PSX: KSE-100 up over 1% on buying in key sectors

The Pakistan Stock Exchange (PSX) saw a 1% increase in the KSE-100 Index on Tuesday, following heightened buying activity in key sectors. The benchmark index reached 168,355.31 at 10:50am, up 1,791.25 points or 1.08% from the previous close. Analysts attribute this buying trend to a shift in investor perception of the geopolitical situation, rather than a lack of risk.

Saad Hanif, Head of Research at Ismail Iqbal Securities, noted that lower international oil prices due to renewed diplomatic engagement on the Middle East conflict are positively impacting Pakistan's import bill, current account, and inflation. Additionally, investors who had been sidelined are now selectively re-entering index heavyweights in sectors such as banks, E&P companies, and cement, where valuations appear reasonable against earnings.

However, the recovery is still driven by headline news, with any setbacks in peace talks or an oil price spike likely to quickly reverse sentiment. Volatility is expected in the near term, with investors favoring fundamentally strong, dividend-paying stocks. Key sectors driving the buying momentum include automobile assemblers, cement, commercial banks, oil and gas exploration companies, OMCs, and power generation.

Index-heavy stocks such as ARL, HUBCO, MARI, OGDC, PPL, POL, PSO, SSGC, HBL, MCB, MEBL, and NBP were among those trading in the green. On Monday, the PSX closed marginally higher, supported by select heavyweights but offset by renewed selling pressure in refinery stocks due to a government decision to absorb higher petrol import costs through a reduction in the Petroleum Levy.

Globally, stocks edged lower at the start of Asian trade on Tuesday, with oil prices stabilizing after a previous session's drop. MSCI's Asia-Pacific ex-Japan index fell 0.9%, led by a 3.8% decline in Korean shares. The S&P 500 e-mini futures rose 0.1%, while Japanese markets were closed for a holiday. Wall Street stocks slipped, with the S&P 500 down 0.5% as tech sector earnings weighed on investor confidence, despite a pick-up in US manufacturing activity in October.

Apple shares continued their decline, dropping 2.8% in after-hours trading after the company forecast lower gross margins for the crucial holiday quarter due to rising memory-chip costs and projected services revenue growth that fell short of expectations. The US midterm elections, where President Trump's Republican Party is facing a challenge to retain its control over Congress, are also on investors' minds. Opinion polls suggest the Democrats have a 75% chance of controlling the Senate.