Market watch: Stocks bounce back with 1,015-point surge on UAE assistance

Benchmark index increases 2.7% to settle at 38,562.40

KARACHI: The stock market bounced back with a bang on Monday as the benchmark index surged over 1,000 points propelled by the recent visit of Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al-Nahyan.

During the trip, the prince matched Saudi Arabia's financial package of $6 billion for Pakistan as both the friendly countries offered $3 billion each in cash to stabilise foreign currency reserves and promised oil and gas supplies worth $3 billion each on credit.

The UAE's pledge to support Pakistan injected a new lease of life into the bourse. Investors were rejuvenated as they rushed to buy stocks at attractive valuations, resulting in the index powering past the 38,000-point mark.

Apart from that, a statement from Fitch Solutions that Pakistan's central bank would keep interest rate unchanged at 10% in the next monetary policy statement, due this month, and an uptrend in global markets also encouraged investors to make fresh bets, said analysts.



The Pakistan Stock Exchange (PSX) attracted renewed buying following an uptrend in global markets, UAE support and Fitch statement on interest rate, said Topline Securities CEO Muhammad Sohail while talking to The Express Tribune.

JS Research Head of Equity Sales Syed Atif Zafar said the visit of Abu Dhabi crown prince, which was the first of its kind in the past 12 years, generated positive sentiments at the PSX.

He pointed out that renewed buying was expected in the market since it had become oversold last week.

Topline Securities' analyst Nabeel Khursheed added that improvement in the domestic political scenario also aided the PSX in its rally.

At the end of trading, the benchmark KSE 100-share Index recorded an increase of 1,014.91 points or 2.70% to settle at 38,562.40.

Elixir Securities' analyst Murtaza Jafar said the benchmark KSE-100 index skyrocketed to close at 38,562, up 1,015 points or 2.7% - the biggest single-day gain in two-and-a-half months.



"The exuberance was led by positive developments about financing the external account deficit after conclusion of a successful visit of the Abu Dhabi crown prince. This further helped develop market consensus that the current account deficit will significantly ease going forward," he added.

A recovery in international crude oil prices paved the way for impressive gains in exploration and production stocks. Pakistan Petroleum Limited (+4.4%), Oil and Gas Development Company (+3.8%) and Pakistan Oilfields (+2.7%) collectively contributed 179 points to the day's rise.

Meanwhile, financial stocks too performed well after a sluggish performance post-announcement of December Consumer Price Index (CPI) at 6.17%. United Bank Limited (+5%), Habib Bank Limited (+3.3%) and MCB Bank (+3.3%) contributed 190 points to the index.

"Going forward, we expect investors to track regional indices along with news flow emanating from negotiations between the government of Pakistan and International Monetary Fund (IMF) on a proposed bailout programme," Jafar said.



Overall, trading volumes increased to 157.1 million shares compared with Friday's tally of 64.43 million. The value of shares traded during the day was Rs7.02 billion.

Shares of 345 companies were traded. At the end of the day, 233 stocks closed higher, 90 declined and 22 remained unchanged.

K-Electric was the volume leader with 22.85 million shares, gaining Rs0.47 to close at Rs6.29. It was followed by TRG Pakistan with 7.7 million shares, gaining Rs1.07 to close at Rs23.15 and Lotte Chemical with 7.4 million shares, gaining Rs0.76 to close at Rs18.03.

Foreign institutional investors were net sellers of Rs84.1 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.