Bulls return on Saudi investment prospects

KARACHI:

Following selling pressure for three consecutive sessions, a highly bullish momentum swept through the Pakistan Stock Exchange (PSX) on Friday, with the KSE-100 index skyrocketing by over 1,200 points and reaching close to the 72,000 mark.

In the morning, trading commenced with a positive mood in the backdrop of optimism about a new International Monetary Fund (IMF) loan programme and prospects of huge Saudi investment.

The bourse also found support from the inflation data which showed that the Consumer Price Index (CPI) slowed down to 17.3% in April 2024.

Investors welcomed news reports about a 50-member Saudi team arriving for investment talks, planned increase in expenditure on development projects and measures being taken to help wheat farmers.

“Stocks closed bullish due to across-the-board interest in shares amid upbeat CPI data showing inflation at 17.3% in April, which may lead to the easing of monetary policy, and the government’s plans to increase development spending by 27% to Rs1.2 trillion in FY25,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Rupee recovery, deliberations over privatisation of state-owned enterprises and speculation ahead of the new IMF loan talks also played the role of catalysts in a higher close at the PSX.”

At close, the benchmark KSE-100 index secured gains of 1,244.45 points, or 1.76%, and settled at 71,902.09.

Topline Securities, in its report, wrote that a bullish session was observed at the PSX where the KSE-100 index surged by 1,244 points to close at 71,902.

“This positivity in the market can be attributed to news that a 50-member Saudi team will arrive for investment talks on Sunday,” it said.

The weekly Sensitive Price Indicator (SPI) recorded a 1% decrease week-on-week (WoW) for the week ended May 2, 2024 with a 24.4% year-on-year decline, prompting increased market activity in the wake of additional stimulus measures. Investors seized the opportunity to accumulate cyclical stocks, Topline added.

Arif Habib Limited (AHL), in its commentary, stated that the market demonstrated a robust recovery, climbing by 1.76% day-on-day to conclude the week at 71.9k, thereby mitigating the weekly decline to just 1.16%.

Among the shares traded on the KSE-100 index, 77 rose while 17 fell. Key contributors to the index gains were Pakistan Petroleum (+6.63%), Oil and Gas Development Company (+4.41%) and Hub Power (+2.65%), it said.

Cement stocks continued their rally with DG Khan Cement (+4.38%), Fauji Cement (+5.95%) and Pioneer Cement (+3.56%) moving north. “With earnings season out of the way, the market can now focus on the falling inflation and rate cuts,” AHL added.

JS Global analyst Mohammed Waqar Iqbal noted that bulls pushed the KSE-100 to an intra-day high of 71,986 points. The oil and gas sector led the market, which closed up by 1,244 points.

“Going forward, we recommend investors to adopt a buy-on-dips strategy in the exploration and production, refinery and cement sectors,” the analyst added.

Overall trading volumes increased to 452.2 million shares against Thursday’s tally of 436.99 million. The value of shares traded during the day was Rs24.5 billion.

Shares of 378 companies were traded. Of these, 248 stocks closed higher, 104 dropped and 26 remained unchanged.

Pakistan Petroleum was the volume leader with trading in 26.7 million shares, gaining Rs7.73 to close at Rs124.33. It was followed by Hascol Petroleum with 26.6 million shares, gaining Rs0.7 to close at Rs8.06 and Fauji Cement with 19.3 million shares, gaining Rs1.2 to close at Rs21.36.

Foreign investors were net buyers of shares worth Rs520.1 million, according to the NCCPL.

Published in The Express Tribune, May 4^th, 2024.

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