Karachi (Newsman): The previous week, the Pakistan Stock Exchange (PSX) achieved a historic milestone: It finished at 101,357, up 3.6%, surpassing the 100,000-point mark.

The market experienced a 3,500-point drop and heavy selling earlier in the week due to increased political instability.

However, once protests were called off by the Pakistan Tehreek-e-Insaf (PTI), the market saw a strong recovery, bolstered by the banking sector over the elimination of the minimum deposit rate (MDR) for conventional banks and easing inflation expectations.

Despite $15 million in international selling during the week, institutional investors’ domestic purchases—particularly those of mutual funds and insurance companies—helped keep the momentum going.

Also read: PSX Hits Record High as KSE-100 Crosses 100,000 Points

The decrease in the yields on government bonds, ranging from 61 to 85 basis points (bps), was one of the encouraging signs of the economy. Against the objective of Rs800 billion, the government raised Rs616 billion through an auction of T-bills.

Additionally, after receiving a $500 million loan from the Asian Development Bank (ADB), the country’s foreign exchange reserves and vehicle financing increased.

Banking Sector Drives KSE-100 Gains Amid Political Challenges

These incidents have improved market morale, and the KSE-100 will continue to gain ground during the coming week.

Due to strong investor interest in the banking industry and a slight reduction in political noise, the bourse saw a 280-point rise at the start of the week, reaching a new all-time high of 98,080.

Concerns over the growing political instability caused the KSE-100 to record it’s biggest-ever single-day decline the next day, plunging 3,506 points, or 3.57%, during a tumultuous session.

The PSX exhibited remarkable resiliency on Wednesday, soaring nearly 4,700 points, the highest single-day increase in the bourse’s history, following the record decline the day before.

The stock market achieved a historic milestone when the PSX crossed the 100,000-point threshold the following day. Analysts linked the rally to improved investor optimism, bolstered by falling interest rates and decreasing inflation, making stocks more appealing for bigger returns.

The oil, banking, and pharmaceutical industries saw robust increases on Friday, which caused the market to post another notable leap of around 1,300 points and reach a new all-time high above 101,000.

At 101,357, the benchmark KSE-100 index closed at a gain of 3,559 points, or 3.64%, on a weekly basis (WoW).

Also read: PM Hails PSX Achievement as KSE-100 Index Reaches Historic 100,000 Mark

According to JS Global analyst Abdul Basit’s evaluation, bullish momentum persisted, with a robust recovery following the cancellation of political protests offsetting the slight loss.

Buying from mutual funds and insurance companies helped counterbalance the $15 million in foreign selling, which caused average volumes to drop by 1% WoW to 979 million shares.

According to Basit, the week saw an enormous amount of activity in bank stocks due to events in the banking industry about adjustments to the MDR. Furthermore, yields dropped 61–85 basis points across various tenors in the most recent T-bills auction, which saw the government raise Rs616 billion versus the aim of Rs800 billion.

According to him, auto finance recovered for a second consecutive month in October 2024, hitting Rs236 billion, up 3.7% from the previous month.

According to the most recent data, the foreign exchange reserves of SBP rose $131 million to $11.4 billion. Basit noted that the $500 million Pakistan received from the ADB as part of its climate financing initiative would be reflected in reserves next week.

AHL Research Highlights Key Factors Behind PSX’s Market Recovery

According to research by AHL Research, PSX’s robust recovery was mostly driven by a strong rise in commercial banks and reduced inflation.

The Pakistani rupee ended the week at Rs278.04 versus the US dollar, declining by 0.10% WoW.

AHL Claimed that commercial banks (1,676 points), technology and communication (349 points), oil and gas exploration firms (284 points), oil and gas marketing companies (260 points), and cement (234 points) all made strong contributions to the sector.

Also read: PSX Experiences Growth as Political Issues Subside

Habib Bank Ltd. (694 points), Bank AL Habib (538 points), Pakistan Petroleum (274 points), Systems Ltd. (255 points), and Bank Alfalah (205 points) were all good contributors to the stock.

According to AHL, they “anticipate the market to sustain its positive momentum in the coming week, driven by expectations of a further decline in inflation,” with a 4.7% inflation forecast for November.

It added that several stocks were trading at appealing prices, which would probably keep drawing in investors.

The previous week’s net selling was $32.9 million, while the outgoing week saw $15.1 million in foreign selling.