Stocks surge on debt settlement talk
A sign of the Pakistan Stock Exchange is seen on its building in Karachi, Pakistan January 11, 2016. PHOTO: REUTERS
Pakistan Stock Exchange (PSX) on Tuesday experienced a notable surge in an earnings season rally, driven by expectations of approval of proposals by the International Monetary Fund (IMF) for resolving the circular debt crisis and addressing power tariff concerns.
In the morning, trading commenced on a lacklustre note when the KSE-100 index touched its intra-day low at 63,176.97 points. However, as the day progressed, optimism grew over S&P Global’s hint at a potential ratings upgrade for Pakistan, depending on collaboration with financial institutions to secure an IMF deal.
Additionally, upbeat data of exports and trade deficit for January 2024 contributed to the market’s positive sentiment. The index touched the intra-day high at 63,885.10 points well after midday. Notably, the exploration and production (E&P) sector saw significant gains and the bourse closed the day near the 64,000 mark.
“Stocks closed bullish on speculation about the IMF’s approval of the Special Investment Facilitation Council (SIFC) proposals for resolving the power sector circular debt issue and addressing tariff concerns,” said Arif Habib Corp MD Ahsan Mehanti.
“S&P projections for ratings upgrade through working together with financial institutions for securing an IMF deal and upbeat data of exports and trade deficit for January 2024 played the role of catalysts in bullish close in an earnings season rally at the PSX.” At close, the benchmark KSE-100 index recorded a surge of 796.10 points, or 1.26%, and settled at 63,799.02.
Topline Securities, in its commentary, wrote that the KSE-100 index maintained its upward momentum in line with the previous week’s trend. “Notably, in the E&P sector, Oil and Gas Development Company (+5.71%) and Pakistan Petroleum (+5.39%) saw price increases, buoyed by news of the caretaker government’s formal discussions with the IMF to settle the gas sector circular debt to the tune of Rs1.2 trillion,” it said.
Activity was also observed in the cement sector, with DG Khan Cement (+2.64%), Lucky Cement (+1.08%) and Cherat Cement (+1.05%) closing higher than the previous day, partly due to the drop in international coal prices to $94 per tonne, Topline added.
Read PSX faces volatility amid political uncertainty
Arif Habib Limited (AHL), in its report, wrote that upside moves remained on target for 64k ahead of elections. “Some 68 stocks rose while 22 declined with Oil and Gas Development Co (+5.4%), Pakistan Petroleum (+5.27%) and Mari Petroleum (+3.47%) contributing the most to the index gains,” it said, adding that MCB Bank (+0.93%) announced results for 4QCY23 where earnings per share stood at Rs14.24, up 23% year-on-year but down 14% quarter-on-quarter.
JS Global analyst Mohammed Waqar Iqbal noted that the market opened on a positive note and the momentum continued throughout the day, mainly fueled by news of a potential one-off dividend declaration by E&P companies following approval from the IMF.
Overall trading volumes increased to 330.9 million shares against Friday’s tally of 263.5 million. The value of shares traded during the day was Rs15.2 billion.
Shares of 336 companies were traded. Of these, 230 stocks closed higher, 79 dropped and 27 remained unchanged.
Pakistan International Airlines was the volume leader with trading in 47.1 million shares, losing Rs0.1 to close at Rs10.84. It was followed by Oil and Gas Development Co with 23.1 million shares, gaining Rs7.97 to close at Rs155.57 and Cnergyico PK with 21.3 million shares, gaining Rs0.16 to close at Rs4.15.
Foreign investors were net buyers of shares worth Rs582.3 million, according to the NCCPL.
Published in The Express Tribune, February 7th, 2024.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.