Market watch: KSE-100 jumps over 1,500 points amid Saudi support

Benchmark index increases 4.13% to settle at 39,271.12

KARACHI: Stocks bounced back with a bang on Wednesday as the KSE-100 index surged over 1,500 points - the biggest such increase in the current calendar year so far.

Investors celebrated the news that Saudi Arabia had agreed to provide $6 billion in financial assistance to Pakistan to help avert a balance of payments crisis. Of the $6 billion, Riyadh will deposit $3 billion with the State Bank of Pakistan to shore up the country's foreign currency reserves and provide $3 billion in oil credit facility.

The financial support, which came at a critical time when Pakistan's foreign currency reserves had dipped to sharply lower levels, boosted confidence of market participants. Buying momentum was witnessed in stocks across the board, with the index powering past 39,000 points.

The KSE-100 shot up from the moment trading began as positive news fuelled a bullish rally. Commenting on the development, Topline Securities CEO Mohammad Sohail said, "The market is up on Saudi Arabia's balance of payments support."



"Saudi Arabia's cash and deferred oil facility is far larger than expectations. This will provide much-needed support to Pakistan's worsening external account position. It will also help Pakistan negotiate a smaller loan facility from the International Monetary Fund (IMF) with less stringent conditions," Sohail added.

At the end of trading, the benchmark KSE 100-share Index recorded an increase of 1,556.22 points or 4.13% to settle at 39,271.12.

Elixir Securities' analyst Murtaza Jafar said equities skyrocketed in the highest daily performance since April 14, 2015.

"Investors cheered Saudi Arabia's $6-billion financial package, which should help Pakistan buy time for implementation of structural reforms and be better placed while negotiating with the IMF a bailout package," he said. "Local institutions resorted to aggressive buying in blue-chip index names."

In other news, Descon Oxychem (+5%) announced that it would redeem its preference shares at par value, which had the potential to do away with 50% dilution, which would have otherwise kicked in FY21.

On the results front, MCB Bank (+4.98%) posted 3QCY18 earnings per share (EPS) of Rs3.50, taking 9MCY18 EPS to Rs11.46, along with interim cash dividend of Rs4 per share.



"We expect sustainable market performance to be contingent on financial commitments from China, which may emanate out of the prime minister's scheduled visit in the first week of November. In our view, given unprecedented external financing requirement, a new IMF programme will still remain need of the hour," Jafar added.

Overall, trading volumes increased to 333.6 million shares compared with Tuesday's tally of 223.9 million. The value of shares traded during the day was Rs8.6 billion.

Shares of 425 companies were traded. At the end of the day, 372 stocks closed higher, 46 declined and seven remained unchanged.

K-Electric Limited was the volume leader with 68.5 million shares, gaining Rs0.71 to close at Rs6. It was followed by The Bank of Punjab with 30.3 million shares, gaining Rs0.96 to close at Rs11.79 and Lotte Chemical with 25.5 million shares, gaining one rupee to close at Rs19.22.

Foreign institutional investors were net sellers of Rs1.26 billion worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.