Stocks rebound on renewed IMF deal hopes

KSE-100 index gains 258.11 points and settles at 40,670.88

LAHORE:

Pakistan Stock Exchange (PSX) bounced back on Thursday and a fresh buying spell helped the KSE-100 index recover over 250 points as investor confidence rejuvenated in anticipation of a staff-level agreement with the International Monetary Fund (IMF) soon.

Market players took fresh positions in the wake of rupee’s fall against the US dollar in the inter-bank market close to the black market level, which indicated that Pakistan would soon reach the agreement with the IMF.

Furthermore, positive corporate results in banking, oil and gas sectors boosted investor confidence. Positive momentum continued throughout the day with active stock buying at attractive valuations, helping the index to touch an intra-day high of 40,852.97 points.

Strong investor sentiment helped accelerate the market’s advance towards the end and it closed in the green.

At close, the benchmark KSE-100 index registered an increase of 258.11 points, or 0.64%, and settled at 40,670.88.

Topline Securities, in its report, said that Pakistan equities had a positive day. “ The KSE-100 index registered buying in blue chips, which supported the market to close the day at 40,671 (+258 points; or 0.64%),” it said.

During the trading hours, the rupee lost 6.66% against the greenback and closed at 285.09 versus 266.11 a day ago in inter-bank dealings.

Exploration and production (E&P), fertiliser, banking and power sectors contributed positively to the index where Pakistan Oilfields, Engro Fertilisers, United Bank, Engro Corporation and Hub Power added 260 points cumulatively.

“In MPS (monetary policy statement), the SBP increased its policy rate by 300 basis points to 20%. Discount rate reaches 21%, its highest since the start of this policy in early 1990,” Topline added.

Arif Habib Limited, in its comments, said that a positive session was witnessed at the PSX. “The benchmark KSE-100 index opened in the green as bulls kept pushing the market within the positive zone and pulled the index up to an intra-day high of 440.20 points,” it said.

“Today’s bullish move was owing to the recovery phase due to the discounted stock prices offering all-time low price-to-earnings multiples that attracted investors to accumulate dividend-yielding stocks to add value to their portfolio.”

Sectors contributing to the market’s performance included E&P (+143.5 points), commercial banks (+125.5 points), fertiliser (+91.1 points), power generation and distribution (+36 points) and chemical (+15.6 points).

Traded value decreased by 18% to $28.6 million as against $34.8 million a day ago, the AHL report added.

JS Global analyst Muhammad Shuja Qureshi, in his report, said that after an initial drop of 50 points, the KSE-100 bounced back and remained positive throughout the day.

Investors believed that a staff-level agreement would be signed soon with the IMF as some final steps were being taken by the government and the State Bank, he said, adding that the steep slide of 6.7% in rupee’s value in inter-bank dealings was an indication.

“Since policy rate has been increased by 3%, which is higher than expectations, the market is expected to come under pressure. Investors are advised to accumulate selective stocks at dips,” the JS analyst added.

Overall trading volumes decreased to 152.2 million shares compared with Wednesday’s tally of 167.4 million. The value of shares traded during the day was Rs8.1 billion.

Shares of 313 companies were traded. At close, 108 stocks closed higher, 182 declined and 23 remained unchanged.

WorldCall Telecom was the volume leader with trading in 12.6 million shares, losing Rs0.04 to close at Rs1.27. It was followed by Hub Power with 11.2 million shares, gaining Rs1.56 to close at Rs72.04 and Maple Leaf Cement with 7.6 million shares, losing Rs0.41 to close at Rs23.81. Foreign investors were net sellers of Rs539.8 million worth of shares during the trading session, according to the NCCPL.