Shares at PSX rally 500 points on hopes of consensus on forming new govt

Bulls returned to the Pakistan Stock Exchange (PSX) on Monday as shares gained over 500 points, with analysts attributing the rally to hopes that political parties would soon reach an agreement on forming the government.

Last week, growing doubts about the formation of a new coalition government amid raging protests against alleged manipulation of election results across the country kept the market sentiment depressed. The KSE 100-share index closed at 59,872.96 points plunging by a staggering 3,071.04 points or 4.9pc week-on-week.

Today, volatility prevailed as the index traded sideways. However, at closing time, the KSE-100 index gained 586.78, or 0.98 per cent, to stand at 60,226.43 from the previous close of 59,872.96.

Shahab Farooq, head of research at Next Capital Limited, noted that volatility continued at the stock exchange due to “prevalent political uncertainty”.

However, he added that hopes of a settlement between the PML-N and PPP, the Supreme Court adjourning the hearing on a petition seeking to annul the Feb 8 polls and recovery in international bonds “fueled positive sentiments in the market”.

It should be mentioned that a day earlier, PML-N Khawaja Asif predicted that despite all odds the PML-N and PPP will form the federal government while insiders told Dawn that Nawaz Sharif was active in behind the scenes efforts for the formation of the federal and Punjab governments.

Mohammed Sohail, chief executive of Topline Securities, also attributed the upward trajectory to hopes that political parties would soon reach an agreement on the formation of a new government.

He added that sentiments had improved despite futures contracting the previous week.

Faran Rizvi, head of equity sales at JS Global, observed that analysing upcoming government policies was crucial for investors anticipating long-term economic stability.

He noted that while the market may experience instability until the new government was formed, banking stocks could be a resilient long-term investment given their potential to “benefit from economic recovery and policy measures supporting financial sectors”.