Bulls keep control as stocks extend rally

KSE-100 index gains 355.19 points, settles at 61,914.34

KARACHI:

The Pakistan Stock Exchange (PSX) continued its recovery on Thursday as the KSE-100 index extended its rally and closed near the 62,000-mark, buoyed by optimism about the settlement of political parties for a coalition power-sharing deal.

As trading commenced, the index maintained its momentum from the previous day, experiencing fluctuations but steadily rising throughout the session.

The decision on power-sharing arrangements to form a new government instilled hope and bolstered investor confidence, resulting in a positive sentiment for the day.

The strong performance of dollar bonds, coupled with rupee stability, contributed to the index’s advancement.

Although the KSE-100 index briefly dipped before the final hours, growing investor confidence propelled it to climb rapidly, reaching an intra-day high at 61,952.09 points just before the close.

The market closed in the green, nearing the 62,000-point mark.

“Stocks closed higher after the government slashed NSC rates and a coalition power-sharing deal was reached, leading to political stability,” said Arif Habib Corp MD Ahsan Mehanti.

“Dollar bonds’ outperformance, strong earnings outlook, and rupee stability played a catalyst role in the bullish close.” At the close, the benchmark KSE-100 index recorded a significant gain of 355.19 points, or 0.58%, settling at 61,914.34.

Topline Securities noted that it was ‘a positive day.’ Continuing its recovery mood from Wednesday, Pakistan equities initiated the business on a positive note, remained bullish almost throughout the session, it said.

“The aforementioned buying momentum can be attributed to consensus regarding the formation of a new government, where major political parties agreed and informed about the upcoming coalition setup.” Due to the development, across-the-board buying momentum has been seen throughout the trading hours, it added.

Resultantly, the tech, bank and fertiliser sectors contributed positively to the index as Systems Limited, Meezan Bank, TRG Pakistan, Engro Fertilisers, and United Bank added 367 points, cumulatively, Topline added.

Read PSX soars as political gridlock breaks

Arif Habib Limited (AHL) observed in its report that “Further gains have now pushed the KSE-100 into the first hurdle level at 62,000 which needs to be crossed to indicate additional gains towards 64,000.”

Major investor participation was in the three-month T-bill most likely driven by expectations of a possible delay in the interest rate cut cycle, it said.

“From the government’s perspective, the reason for declining bids at higher rates for longer tenors could be the anticipation of a reversal in the interest rate cycle in the coming months. The government may aim to secure liquidity in longer-term instruments once rates are revised downward,” the AHL report added.

JS Global analyst Mohammed Waqar Iqbal noted that the market continued with the positive momentum.

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

Overall trading volumes decreased to 324.8 million shares against Tuesday’s tally of 362.7 million. The value of shares traded during the day was Rs13.9 billion.

Shares of 352 companies were traded, with 185 stocks closing higher, 143 dropping, and 24 remaining unchanged.

Pak Elektron led in volume with trading in 23.11 million shares, losing Rs0.25 to close at Rs22.74. It was followed by Cnergyico PK with 21.2 million shares, losing Rs0.07 to close at Rs3.95, and Pakistan International Bulk Terminal with 16.25 million shares, gaining Rs0.51 to close at Rs6.22. Foreign investors were net buyers of shares worth Rs638 million, according to NCPL.

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

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