Stocks jump in July as Covid-19 outlook improves

The benchmark KSE-100 index on the last day of week and month — Thursday — closed the week in green, gaining 1,651 points or 4.4 percent compared to the last week.

“PSX breaks records with a brilliant start for the financial year!! The highest volume on record for the first month of a fiscal year was recorded for July 2020. The total volume of shares traded was 11.27 billion in July 2020,” said the Pakistan Stock Exchange on Twitter.

“This is also the highest monthly volume of shares traded since January 2017. Furthermore, the smooth continuity of operations from technological, operational and regulatory perspectives, despite the huge trading volumes, reflects well upon the robust systems in place at PSX.”

This week marks the fourth consecutive positive close for the KSE-100 index as bulls have gripped the stocks with both hands owing to the flurry of positive macroeconomic news.

Benchmark index has also closed the last 23 of the 25 sessions in green with stocks gaining a record 16.5pc during the period. Majority of the impetus to the index has come from macroeconomic stabilisation in the form of narrowing current account deficit, improving economic outlook as the Covid-19 transmission rates slow down and higher-than-expected foreign exchange inflows in the form of foreign loans and record-high remittances.

See also : Business Confidence Weakens

Meanwhile, in terms of specific sectors, the Prime Minister’s construction package has sent an adrenaline rush in the construction allied sectors including cement, steel, and engineering. Meanwhile, the banking sector has also rallied on the back of higher than expected earnings in the ongoing month due to the record high interest rates in the last year.

The falling interest rates since the ease in inflation due to Covid-19 has further improved the outlook for the auto sector which was battered by low demand and new government policies to improve taxation. With rates low, the banks can now increase car leasing to help auto producers increase their sales in the coming few quarters.