The Pakistan Stock Exchange’s (PSX) benchmark index, the KSE-100, rebounded on Wednesday, registering a significant recovery after the previous day’s substantial decline. The index surged by 2.86%, or 1,692.65 points, to close at 60,863.62, effectively halting the bearish trend that had persisted throughout the preceding week. The recovery came on the heels of a 4.1% decline on Tuesday, which had seen the index drop by 2,534 points to 59,170.97, marking an 11% decrease from its all-time high of 66,427 points on December 12. The market’s rebound was attributed to renewed buying activity following the previous day’s downturn, with investors displaying caution ahead of the year-end closing.
Additionally, the index’s recovery was supported by the bounce-back from technical support levels and the alleviation of concerns related to high leverage, which had contributed to the previous day’s decline. The market’s attractive price-to-earning ratio, which stood at 4.1x in comparison to the previous five-year average of 5.9x, also contributed to the positive sentiment, with the index still trading at an appealing valuation despite the recent correction. The recovery in the stock market is seen as a positive sign, with experts anticipating further gains in the coming year, with the benchmark KSE-100 total return index expected to reach 75,000 in 2024. The market’s recovery is underpinned by the positive outlook for the economy and the anticipation of continued foreign exchange inflows, bolstering investor confidence in the stock market’s prospects.