Market watch: Stocks soar as PSX reverts to old trading system

KARACHI:

The Pakistan Stock Exchange (PSX) on Monday staged a spectacular rally as investors cheered the redeployment of the old trading system coupled with clarity on the political front.

Bulls dominated the market throughout the session and sent the benchmark KSE-100 index soaring by a handsome 790 points. The index closed just below the 47,000-point mark.

The stock market’s return to the old trading system (KATS) due to technical issues in the new system (NTS) revived investor interest, which had remained subdued over the past week.

Strong positive triggers including Saudi Arabia’s financial assistance for Pakistan and expected announcement of the resumption of International Monetary Fund (IMF) loan programme bolstered the confidence of investors, who resorted to cherry-picking of stocks.

Moreover, appreciation of the rupee against the greenback put the cherry on top of the cake for market participants, who were motivated to take fresh positions.

Earlier, trading kicked off with a sharp spike and the market sustained the bullish trend throughout the session. The index skyrocketed to intra-day high of 47,252 points by midday. However, the announcement of a surge in October’s Consumer Price Index (CPI) erased some of the gains.

At close, the benchmark KSE-100 index recorded an increase of 790.07 points, or 1.71%, to settle at 46,974.78.

Speaking to The Express Tribune, Arif Habib Limited Head of Research Tahir Abbas said that the stock market had been trading below its capacity for the past few days due to the lack of developments in talks with the International Monetary Fund (IMF) and political uncertainty.

“The market is rallying on the back of normalisation of political situation coupled with timely assistance from Saudi Arabia,” he said. “Besides, rapid appreciation of the rupee against the US dollar is also contributing to the market’s advance.”

According to reports, Pakistan was nearing an agreement with the IMF to resume the loan programme, he pointed out. The research head added that a combination of positive news flow bolstered investor interest and they were making fresh investments.

Finally, the return to the old trading system sent the market soaring. Earlier, problems in the new trading system had limited gains in the past week.

“The new system had several issues and trading volumes remained on the lower side last week, which weakened investor spirits,” he said. “Owing to the technical glitches, the index was unable to rise to its actual potential when Saudi Arabia made the upbeat announcement. Therefore, part of the uptrend is stemming from the facilitation extended by the Middle Eastern nation.”

Although the shift to the previous trading system was temporary, it proved vital for lifting the market, the analyst said.

Arif Habib Limited, in its report, said that bullish momentum was witnessed in first half of the market session as the index touched intra-day high of 1,059 points due to appreciation of Pakistani rupee, downturn in commodities’ price cycle and easing of political noise.

“Cyclical sectors – cement and steel – contributed the most to the bull-run,” it said.

After hitting the intra-day high, the investors opted for profit-booking after the announcement of CPI reading for October, which came in at 9.19% year-on-year (+1.9% month-on-month) against market expectations of 8.5%. That resulted in net gains of 790 points at the end of the trading session.

“Expectations of interest rate hike by the State Bank of Pakistan in the upcoming monetary policy caused profit-booking in cyclical stocks and accumulation of banking stocks,” the report said.

Sectors contributing to the performance included cement (+151 points), fertiliser (+97 points), exploration and production (+79 points), technology (+75 points) and banks (+29 points).

Overall trading volumes increased to 430.1 million shares compared with Friday’s tally of 270.4 million. The value of shares traded during the day was Rs14.8 billion.

Shares of 372 companies were traded. At the end of the day, 271 stocks closed higher, 87 declined and 14 remained unchanged.

WorldCall Telecom was the volume leader with 53.9 million shares, gaining Rs0.09 to close at Rs2.46. It was followed by Byco Petroleum with 24.5 million shares, gaining Rs0.44 to close at Rs7.47 and Hum Network with 23.2 million shares, gaining Rs0.03 to close at Rs7.11.

Foreign institutional investors were net sellers of Rs167.4 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.