PSX soars as political gridlock breaks

KSE-100 index soars over 1000 points, settles at 61,559.15

KARACHI:

The Pakistan Stock Exchange (PSX) bounced back on Wednesday, making a U-shaped recovery and erasing losses as the resolution of internal political concerns spurred investor interest following an agreement to form a government.

Earlier, trading kicked off with minor ups and downs, but somber sentiment kept the KSE-100 index activity dull for most of the day.

An arrangement for power-sharing to set up a fresh government rejuvenated investor interest in the bourse and triggered a rally, with the index touching an intraday high of 61,620.85.

Gains were also accelerated by rolling Pakistan Eurobonds on the favourable political developments and an uptrend in the rupee value. Strong earnings in the banking sector further lifted the market.

With the revival of investor interest, the market skyrocketed over 1000 points to close the day above the 61,500-point mark.

“Stocks closed bullish after a consensus over the power-sharing deal to form a new government and upbeat data on the trade deficit falling by 32.7% YoY to $13.16 billion for July-Jan’24,” said Arif Habib Corp MD Ahsan Mehanti.

“Reports of a reduction in NSC rates, surging Pakistan Eurobonds on the formation of a coalition government played a catalyst role in the bullish close”.

At the close, the benchmark KSE-100 index recorded a significant gain of 1094.91 points, or 1.81%, settling at 61,559.15.

Topline Securities noted that the index maintained a positive trend throughout the day.

The market optimism stemmed from the recent consensus among major political parties to form a coalition government, it said.

This upward movement was driven by Oil & Gas Development Company, Lucky Cement, Pakistan Petroleum, United Bank, and TRG Pakistan, collectively contributing to an additional 322 points on the index.

Read PSX slips despite strong opening

Arif Habib Limited (AHL) observed in its report that “following an agreement to form a government following almost 2-weeks of deadlock, the KSE-100 rallied to close near the high of the day and +1.81% day-on-day”.

United Bank announced its 4QCY23 earnings per share (EPS) of Rs11.0, +3% YoY along with a dividend per share (DPS) of Rs11/share, with main drivers being a jump in interest income and provision reversal.

While Askari Bank reported 4QCY23 EPS of Rs4.78, +108% YoY along with DPS of Rs2.5/share, with main drivers being growth in total income.

“Strong Tuesday session now sets up a test of 62,000 which is the first hurdle that needs to be crossed to indicate a tradable bounce is underway towards 64,000,” AHL added.

JS Global analyst Mohammed Waqar Iqbal noted that the market welcomed clarity on the political front regarding government formation both at the federal and provincial levels.

“We recommend investors to avail any downside as an opportunity to buy in the banking and E&P sectors,” the JS analyst added.

Overall trading volumes increased to 362.7 million shares against Tuesday’s tally of 364.4 million. The value of shares traded during the day was Rs12.5 billion.

Shares of 347 companies were traded, with 242 stocks closing higher, 84 dropping, and 21 remaining unchanged.

Bank of Punjab led in volume with trading in 35.4 million shares, losing Rs0.03 to close at Rs6.24. It was followed by K-Electric with 28.6 million shares, gaining Rs0.04 to close at Rs4.30, and WorldCall Telecom with 21.4 million shares, gaining Rs0.08 to close at Rs1.29.

Foreign investors were net sellers of shares worth Rs39.1 million, according to NCPL.

Published in The Express Tribune, February 22^nd, 2024.

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