Easing political noise propels PSX higher

Pakistan Stock Exchange (PSX) rallied again on Friday as uncertainty about the formation of a new government evaporated, which dispelled investor fears and helped the KSE-100 index gain nearly 750 points.

The market commenced trading with a decline but after about an hour it started rising gradually until midday. Later, after taking a slight dip, the index advanced to the intra-day high at 65,486.46 points just before the close of trading.

The positive momentum came after data showed that inflation reading in Pakistan had come down, which would pave the way for a reduction in the cost of borrowing by the central bank.

World stocks holding at record highs and continuous buying by foreign investors and mutual funds in Pakistan’s market further aided the uptrend. “Stocks closed higher amid reports of inflation falling to 23.1% in February 2024 and easing of political uncertainty after the National Assembly held its session for setting up a new government,” said Arif Habib Corp MD Ahsan Mehanti.

“US assurance of support to break free from the vicious cycle of debt and international financing, and surging global equities played the role of catalysts in bullish close at the PSX.”

At close, the benchmark KSE-100 index recorded a surge of 747.16 points, or 1.16%, and settled at 65,325.69.

Topline Securities, in its report, said that positivity in the market could be attributed to continuous buying by foreign corporates and mutual funds during the outgoing week following the decline in political noise as elected representatives took oath in the first National Assembly session after general elections.

Moreover, “the appointment of PML-N’s Ayaz Sadiq as speaker of the National Assembly after securing majority votes improved investor sentiment,” it said, adding that it indicated that the new government had the desired numbers in the assembly to garner support for taking tough, unpopular decisions to put the economy on the right track.

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Arif Habib Limited (AHL) reported that the KSE-100 gained 4% week-on-week and closed at 65.3k.

Engro Corporation (+7.5%), Meezan Bank (+3.9%) and Mari Petroleum (+4.83%) were the biggest contributors to the index’s gains. Oil and Gas Development Company (-1.43%), Lucky Cement (-0.71%) and Cherat Cement (-2.01%) were the largest drags, it said. February’s Consumer Price Index (CPI) came in at 23.06%, which was lower than expectations as easing commodity prices and moderating food costs helped curb price gains. “This is the lowest inflation since June 2022.” Also, Pakistan’s trade deficit narrowed to $1.71 billion in February against $1.98 billion in the previous month. “Any decline in the support level of 63-64k will provide buying opportunities to target all-time highs at 67k,” AHL added. JS Global analyst Mohammed Waqar Iqbal said the KSE-100 posted gains of 747 points with volumes at 344 million shares.

February CPI stood at 23.1%, which was a 20- month low, he said, adding “we recommend investors to adopt a buy-on-dips strategy in banking, exploration and production, and technology sectors”.

Overall trading volumes decreased to 344.2 million shares against Thursday’s tally of 424.04 million.

The value of shares traded during the day was Rs13.4 billion. Shares of 350 companies were traded. Of these, 172 stocks closed higher, 158 dropped and 20 remained unchanged.

Kohinoor Spinning Mills was the volume leader with trading in 71.4 million shares, gaining Rs0.67 to close at Rs5.36. It was followed by K-Electric with 19.4 million shares, losing Rs0.03 to close at Rs4.87 and Treet Corporation with 17.5 million shares, gaining Rs0.72 to close at Rs18.02.

Foreign investors were net buyers of shares worth Rs238.2 million, according to the NCCPL.