Stocks surge on political clarity

Benchmark KSE-100 index climbs 490.11 points, settles at 63,305.93

KARACHI:

Pakistan Stock Exchange (PSX) on Monday experienced a significant bullish activity as investors were encouraged by the easing of political turmoil following the election of chief ministers of Sindh and Punjab provinces.

In the morning, the trading session commenced with a spike in investor interest when the KSE-100 index surged rapidly in the wake of formation of provincial governments following general elections on February 8.

Resultantly, the index breached the 63,000-point barrier, touching its intra-day high at 63,732.50. However, concerns about the political scenario in the centre owing to delay in convening the National Assembly session by the president, triggered selling pressure towards the close of trading.

Despite the pressure, the KSE-100 index managed to move upwards again, propelled by reports that the government may try to secure up to $8 billion in International Monetary Fund (IMF) loan under the Extended Fund Facility and climate financing.

“Bullish activity was witnessed at the bourse as investors weighed the easing of political noise after the election of CMs for Sindh and Punjab,” said Arif Habib Corp MD Ahsan Mehanti.

“Mid-session pressure emerged on concerns over the outcome of National Assembly session, which has been delayed,” he said, adding that government’s efforts to win up to $8 billion in IMF loan quota under the Extended Fund Facility and climate financing played the role of catalyst in bullish close in a post-election rally at the PSX.

At close, the benchmark KSE-100 index recorded impressive gains of 490.11 points, or 0.78%, and settled at 63,305.93. Topline Securities observed in its report that the KSE-100 index commenced trading on a buoyant note. “This bullish momentum in the market finds its roots in the initiation of the provincial government formation process,” it said.

Notably, the Punjab Assembly elected Maryam Nawaz as the Chief Minister while the Sindh Assembly picked Murad Ali Shah as the Chief Minister. “The smooth progress towards formation of governments at provincial levels has bolstered investor confidence.”

Investor participation rose further with average traded volumes and value reaching 452.9 million shares and Rs16.5 billion respectively, Topline added.

Arif Habib Limited (AHL) remarked in its report that the “price drew into the general election gap on the first trading day of the week.”

Read PSX soars as political gridlock breaks

Some 71 shares rose while 25 fell in the KSE-100 index with Pakistan Oilfields (+2.53%), Meezan Bank (+1.36%) and Systems Limited (+1.36%) being the biggest contributors to the gains, it said, adding that tech names remained well bid with NetSol Technologies (+7.5%), Air Link Communication (+5.6%) and TRG Pakistan (+2.45%) all gaining significant ground.

Engro (+0.62%) announced CY23 earnings per share of Rs39.17, down 14% year-on-year and dividend per share of Rs48. For the Oct-Dec quarter, Engro booked loss per share of Rs3.22 due to the loss on thermal assets re-measurement.

“It is pertinent to note that this loss on re-measurement will not result in cash outflow and when the sale of thermal assets concludes, the difference between the agreed sale price and the cost of investment (gain on divestment) will be reflected in the standalone accounts,” AHL added.

JS Global analyst Mohammed Waqar Iqbal noted that political clarity and better financial results fueled the market momentum. “Going forward, a cautious approach is recommended and investors are advised to sell on strength,” the analyst added.

Overall trading volumes increased to 452.9 million shares against Friday’s tally of 377.97 million. The value of shares traded during the day was Rs16.5 billion.

Shares of 345 companies were traded. Of these, 207 stocks closed higher, 114 dropped and 24 remained unchanged.

K-Electric was the volume leader with trading in 54.1 million shares, gaining Rs0.05 to close at Rs4.44. It was followed by Kohinoor Spinning with 53.4 million shares, losing Rs0.02 to close at Rs4.57 and WorldCall Telecom with 22.97 million shares, gaining Rs0.01 to close at Rs1.31.

Foreign investors were net buyers of shares worth Rs492.3 million, according to the NCCPL.

Published in The Express Tribune, February 27^th, 2024.

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