Market watch: IMF loan approval helps KSE-100 ascend

Benchmark index rises 181.97 points to settle at 45,726.17

KARACHI:

The approval by the International Monetary Fund (IMF) of a third loan tranche under the $6 billion programme for Pakistan kept investor interest alive in the stock market and helped the KSE-100 index gain close to 200 points.

The approval of a $500 million loan tranche by the multilateral lender provided the much-needed positive trigger for investors, who made fresh investment. However, fears of stringent measures expected to be taken by the government to meet IMF’s conditions limited gains.

In addition, worries over soaring inflation, coupled with overall uncertainty in the wake of rising Covid-19 cases across the country, prevented the market from posting significant gains.

Earlier, trading kicked off with a spike and the market touched the 46,000-point mark around noon. However, more than half of the gains were erased as pessimism over the economic situation and looming lockdown restrictions triggered profit-booking at the bourse.

At close, the benchmark KSE-100 index recorded an increase of 181.97 points, or 0.4%, to settle at 45,726.17 points.

A report of Arif Habib Limited stated that the market responded positively to the IMF’s approval of disbursement of the third loan tranche of $500 million and added a total of 456 points during the session. It ended the session up by 182 points.

Although bank, exploration and production, oil and gas marketing and fertiliser stocks were in the red, it was mostly technology, refinery and cement sectors that contributed positively to the index.

The telecom sector saw Pakistan Telecommunication Company as the leading stock, which had a bearing from the sale of Dhabi Group’s stake in Pakistan Mobile Communication Limited (an unlisted company).

In the power sector, Kapco performed well on expectation of release of funds related to the circular debt.

Similarly, the chemical sector saw active trading in Engro Polymer, which fared well on the back of healthy product margins, the report added.

JS Global analyst Maaz Mulla said that the rollover week triggered profit-taking after the benchmark KSE-100 index opened on a positive note and went on to touch intra-day high of +456 points.

However, the positivity could not last long as investors saw this as an opportunity to book profit at higher levels. The market eventually closed at 45,726 (+182 points).

On the news front, the IMF approved four pending reviews of Pakistan’s economy and the release of next loan tranche of around $500 million, reviving the $6 billion programme after it remained derailed for over a year.

Major index movers for the day were TRG Pakistan (+6.3%), Azgard Nine (+7.3%), Lucky Cement (+0.7%), Kapco (+2.8%). However, Meezan Bank (-2.5%), Engro (-0.9%), Hubco (-0.8%) and Pakistan Petroleum (-0.8%) dragged the index down.

Investor interest was witnessed in the auto sector where Pak Suzuki Motor (+4.4%), Indus Motor (+2.6%), Honda Atlas Cars (+4.1%) and Ghandhara Nissan (+1.8%) gained ground.

“Moving forward, we expect the market to remain volatile due to the rollover week and recommend investors to avail any downside as a buying opportunity in value stocks,” the analyst said.

Overall trading volumes rose to 470.4 million shares compared with Wednesday’s tally of 409.7 million. The value of shares traded during the day was Rs25.8 billion.

Shares of 394 companies were traded. At the end of the day, 182 stocks closed higher, 193 declined and 19 remained unchanged.

Pakistan Telecommunication Company was the volume leader with 61.4 million shares, gaining Rs0.59 to close at Rs10.1. It was followed by TRG Pakistan with 39 million shares, gaining Rs9.83 to close at Rs165.68 and Byco Petroleum with 38.4 million shares, gaining Rs0.11 to close at Rs11.

Foreign institutional investors were net sellers of Rs18.1 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.