In a reversal, PSX soars on debt settlement talk

KSE-100 index rises 657.19 points, settles at 63,939.41

KARACHI:

Pakistan Stock Exchange (PSX) began week on a bullish note on Monday, fueled by late-session speculation about government’s resolve to partially settle power-sector circular debt along with restoration of diplomatic ties with Iran.

Initially, the trading session exhibited a lacklustre start due to the lack of positive triggers. The KSE-100 index remained on a downward trend well after midday, eventually hitting its intra-day low at 63,139.72 points.

However, a swift reversal took place with the index rapidly moving upwards as investors were encouraged by a number of factors including reports saying the finance ministry was considering releasing Rs1.25 trillion to the energy sector for debt settlement.

Additionally, the International Monetary Fund’s (IMF) affirmation of satisfactory performance under the standby arrangement (SBA) and a strong economic outlook lifted sentiment. Resultantly, the index crossed the anticipated 64,000 mark, reaching its intra-day high at 64,090.88 points and wiping out all earlier losses.

“Stocks closed bullish on late-session speculation about reports of government’s decision to partially settle up to Rs1.3 trillion worth of power sector circular debt and restoration of diplomatic ties with Iran,” said Arif Habib Corp MD Ahsan Mehanti.

“IMF’s affirmation of satisfactory performance under the SBA and a strong economic outlook played the role of catalysts in bullish close at the PSX.” At close, the benchmark KSE-100 index recorded an increase of 657.19 points, or 1.04%, and settled at 63,939.41.

Topline Securities, in its report, noted that significant buying momentum emerged during the latter half of the trading session post-reports on media channels regarding finance ministry’s consideration to issue Rs1.25 trillion to the energy sector for the settlement of circular debt.

Read PSX bearish over geopolitical concerns

“This development led to a strong rally in energy stocks, with both Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) hitting their upper limits for the day,” it said, adding that Bank AL Habib also touched its upper circuit (post-announcement of board of directors’ meeting, which is scheduled for January 31, to consider CY23 financials) in anticipation of better results along with a good dividend.

Arif Habib Limited (AHL), in its review, stated that the 64,000 level needed to be flipped from resistance to support to set the market’s move towards new highs ahead of elections.

There was a balanced advancers-to-decliners ratio of 46:44, which saw OGDC (+7.5%) and PPL (+7.14%) notch up significant gains while United Bank (-0.4%) and Millat Tractors (-0.63%) were the biggest drags, AHL added.

JS Global analyst Muhammad Shuja Qureshi noted that the week started on a positive note with the KSE-100 index gaining 657 points.

“News regarding the settlement of circular debt turned a dull day around with Oil and Gas Development Company closing at its upper lock and Pakistan Petroleum gaining 7.1% for the day,” he said.

Overall trading volumes increased to 298.7 million shares against Friday’s tally of 287.3 million. The value of shares traded during the day was Rs12.5 billion.

Shares of 335 companies were traded. Of these, 140 stocks closed higher, 171 dropped and 24 remained unchanged.

K-Electric was the volume leader with trading in 97.7 million shares, gaining Rs0.13 to close at Rs5.57. It was followed by Pakistan Petroleum with 23.3 million shares, gaining Rs8.73 to close at Rs131.01 and Pakistan International Airlines Corp with 21.1 million shares, gaining Rs0.03 to close at Rs12.07.

Foreign investors were net sellers of shares worth Rs73.5 million, according to the NCCPL.

Published in The Express Tribune, January 23^rd, 2024.

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