Karachi: The KSE-100 Index reached an all-time high of 82,240 points in September 2024, despite significant foreign portfolio investment (FIPI) selling and rebalancing activities. The index recorded a 3.35% increase for the month, bringing the total gain for the first nine months of the year to 30%.

According to JS Global, the gross FIPI selling in September amounted to US$186 million, with net selling at US$54.9 million, breaking a seven-month streak of net buying. Most of the foreign outflow was absorbed by mutual funds, which had a net inflow of US$42 million, the highest monthly inflow since April 2018. Individual investors followed with a net inflow of US$22 million. Trading volumes decreased by 14% month-on-month, averaging US$58 million per day.

The market was further bolstered by the approval of a US$7 billion Extended Fund Facility (EFF) by the IMF’s Executive Board. The first tranche of approximately US$1 billion was disbursed on September 27, 2024. Additionally, the State Bank of Pakistan (SBP) reduced the policy interest rate by 200 basis points to 17.5%, with further cuts expected in November 2024. This reduction was prompted by a faster-than-expected decline in inflation, which stood at 9.6% in August 2024, and falling global oil prices.

The secondary market saw 12-month yields fall to 13.48%, a 29-month low, with expectations of another 150 basis point rate cut already factored into the market. Dividend-yielding stocks like FFC, EFERT, UBL, and MCB saw significant interest from investors. JS Global projected that if the interest rate spreads narrow further, the KSE-100 Index could reach 100,000 points by the end of the year, with a potential capital upside of 25%. A further reduction in spreads could push the index to 115,000 points, representing a 45% capital upside and a 12% annualized dividend yield.