Bulls extend rally, fuelled by IMF deal

KSE-100 index rises 229.20 points, settles at 65,731.79

KARACHI:

Pakistan Stock Exchange (PSX) on Wednesday extended its bull-run for the third successive day as the International Monetary Fund (IMF) and Islamabad reached a staff-level agreement following the final review under a $3 billion standby arrangement.

Earlier, trading kicked off with optimism that the staff-level agreement would pave the way for the release of last loan tranche of $1.1 billion in March or April.

Pakistan’s economic and financial positions have improved, said the IMF staff in a statement, which encouraged bulls to build their positions, taking the KSE-100 index to the intra-day high of 65,968.02.

Additionally, Pakistan’s current account surplus reached an impressive $128 million in February, which reduced pressure on the country’s external account and also aided the momentum at the bourse.

According to State Bank of Pakistan’s (SBP) data, the current account balance was in deficit at $303 million in the prior month of January while the deficit stood at $50 million a year ago in February 2023.

Banking and fertiliser sectors continued to notch up significant gains at the bourse, which managed to maintain its upward trajectory for most of the day. However, the index took a dive in the second half and hit the intra-day low at 65,614.94 points.

The market failed to cross the 66,000 mark but closed the day in the green with moderate gains.

“Stocks closed higher after Pakistan and the IMF reached a staff-level agreement, strong data showing a $128 million current account surplus in February and Roshan Digital Account (RDA) deposits reaching $7.4 billion, which supported the rupee recovery,” said Ahsan Mehanti, MD of Arif Habib Corp.

Read PSX bounces back on SBP, IMF optimism

“A rally in dollar bonds that advanced to two-year highs on initial approval of a $1.1 billion IMF payout played the role of catalyst in bullish close at the PSX.”

At close, the benchmark KSE-100 index recorded an increase of 229.20 points, or 0.35%, and settled at 65,731.79.

Topline Securities reported that the KSE-100 index remained positive throughout the day.

Fertiliser and banking sectors contributed positively as Fauji Fertiliser Company, Meezan Bank, National Bank of Pakistan, Packages Limited and Engro Corporation added 151 points to the index, it said.

Arif Habib Limited (AHL), in its report, commented that “another approach and knockback from 66,000 will make the eventual breach more powerful”.

The IMF gave its initial approval for the last $1.1 billion tranche of the current programme, which would ensure debt servicing through June, it said.

Pakistan International Airlines and Pakistan Telecommunication Company again gained the maximum value for the day.

“The outlook remains positive with the clock ticking on 66,000 containing the price action,” the AHL report added.

JS Global analyst Mubashir Anis Naviwala said that bullish momentum persisted, largely driven by news of a staff-level agreement with the IMF during market hours.

“Looking forward, we suggest investors to consider adopting a buy-on-dips strategy, particularly focusing on banking, exploration and production, and technology sectors,” the analyst added.

Overall trading volumes increased to 341.8 million shares against Tuesday’s tally of 323.3 million. The value of shares traded during the day was Rs11.8 billion.

Shares of 342 companies were traded. Of these, 173 stocks closed higher, 146 dropped and 23 remained unchanged.

The Bank of Punjab was the volume leader with trading in 45.01 million shares, gaining Rs0.14 to close at Rs5.28. It was followed by WorldCall Telecom with 34.4 million shares, losing Rs0.02 to close at Rs1.36 and The Organic Meat Company with 17.99 million shares, losing Rs0.57 to close at Rs28.97.

Foreign investors were net sellers of shares worth Rs26.04 million, according to the NCCPL.

Published in The Express Tribune, March 21^st, 2024.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.