In sharp U-turn, stocks turn bullish

KARACHI:

Pakistan Stock Exchange (PSX) on Thursday made a sharp U-turn as the KSE-100 index soared over 1,000 points, crossing the 65,000 mark in a giant leap that came in the backdrop of optimism about the last review of the International Monetary Fund’s $3 billion standby arrangement (SBA) and a reduction in bond yields.

The bourse surged as soon as trading began and the uptrend continued steadily almost throughout the day, following the commencement of government’s discussion with the IMF.

The finance ministry’s assurance of the country being in a good shape to complete the SBA and negotiate a new larger and longer loan package lifted investors’ spirit. Furthermore, the fall in Pakistan Investment Bond (PIB) yields in an auction held a day ago acted as a positive trigger and bolstered investors’ interest.

In the auction, the government raised Rs56 billion against the target of Rs190 billion, with cut-off yields decreasing by 2 to 15 basis points, indicating a policy rate cut by the State Bank in March or April. It boosted the positive sentiment and lifted the index to the intra-day high of 65,205.81 towards the close of trading.

The KSE-100 added over 1,000 points to its tally and ended trading above the 65,000 mark.

“Stocks showed sharp recovery on falling PIB yields and rupee recovery in the wake of optimism about IMF review,” said Arif Habib Corp MD Ahsan Mehanti.

“Ministry of Finance’s claims to have met all targets agreed with the IMF to complete the second review under the SBA, which would clear the way for the release of a $1.1 billion tranche, played the role of catalysts in bullish close at the PSX.”

At close, the benchmark KSE-100 index recorded a surge of 1,015.82 points, or 1.59%, and settled at 65,064.27.

Topline Securities, in its report, said that in Thursday’s trading session, Pakistan equities reached 65,064. “Investor optimism was fuelled by expectations of a positive outcome from the meeting with the IMF,” it said.

Additionally, the PIB auction held on Wednesday indicated the bond market’s inclination towards an anticipated rate cut in April, if not in March.

Topline Securities’ Deputy Head of Sales Ali Najeb said that the “PSX welcomed dialogue with the IMF team for the last tranche of $1.2 billion of the SBA programme as the market regained the 65,000 level and recovered all the ground lost in the previous session”.

As a result, Oil and Gas Development Company, Pakistan Petroleum, Mari Petroleum, Meezan Bank and Pakistan State Oil collectively contributed 366 points to the index, Topline added.

Arif Habib Limited (AHL), in its report, noted that the “general election gap” continued to have significance as it pushed the index back above 65,000.

Tech names remained hot with Pakistan Telecommunication Company (+7.55%), Air Link Communication (+6.94%) and Systems Limited (+2.08%) gaining ground.

The report added that “66,000 remains the near-term level to overcome, and doing so will trigger the move towards new all-time highs”.

Overall trading volumes increased to 315.2 million shares against Wednesday’s tally of 252.8 million. The value of shares traded during the day was Rs10.5 billion.

Shares of 336 companies were traded. Of these, 248 stocks closed higher, 72 dropped and 16 remained unchanged.

WorldCall Telecom was the volume leader with trading in 42.7 million shares, gaining Rs0.08 to close at Rs1.35. It was followed by Cnergyico PK with 36.1 million shares, gaining Rs0.46 to close at Rs5.09 and Kohinoor Spinning Mills with 19.6 million shares, gaining Rs0.54 to close at Rs4.79.

Foreign investors were net sellers of shares worth Rs29.9 million, according to the NCCPL.

Published in The Express Tribune, March 15^th, 2024.

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