Loan deal projection propels PSX to new high

KARACHI:

The remarkable rally continued at the Pakistan Stock Exchange (PSX) on Tuesday as bulls powered the KSE-100 index to a new record peak above 74,500 points in what analysts said was deep investor interest ahead of budget announcement amid hopes of a larger IMF loan deal.

Despite initially trading at the intra-day low of 73,977 points, the index swiftly gathered steam. Citibank’s projection of a new International Monetary Fund (IMF) loan deal worth $8 billion by July 2024, coupled with planned Saudi investments and anticipated easing of the State Bank of Pakistan (SBP)’s monetary policy, contributed to the market’s momentum.

Expectations about privatisation of state-owned enterprises (SOEs) and successful conclusion of Pakistan-IMF loan talks, and the SBP’s revised forecast for 3.5% economic growth in FY25 further aided the positive sentiment.

Despite minor fluctuations, the index crossed the 74,000 mark, reaching the intra-day high of 74,575.30 points.

Notable gains were seen in fertiliser, exploration and production (E&P), and banking sectors. Ultimately, the bourse closed at an all-time high, surging over 700 points.

“Stocks closed at an all-time high in a pre-budget rally as investors weighed Citibank’s expectations of a new $8 billion IMF loan deal by July 2024, the upcoming Saudi investments and the possible easing of monetary policy from June 2024,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Deliberations over privatisation of SOEs, ongoing Pakistan-IMF loan talks and the SBP’s revised forecast for 3.5% growth in FY25 played the role of catalysts in record close at the PSX.”

At the end of trading, the benchmark KSE-100 index recorded a notable increase of 732.08 points, or 0.99%, and settled at 74,531.19.

Topline Securities, in its report, commented that Pakistan equities continued their northbound journey on Tuesday.

“The market remained buoyant as investors welcomed the initiation of dialogue between Pakistan and the IMF on the forthcoming EFF (Extended Fund Facility) programme of $6 billion for the next three years,” it said.

“Prospects of a reduction in petroleum product prices in the next review kept bears at bay as the price cut will further cool down the inflationary environment in the coming months.”

Top index contributors were fertiliser, E&P and banking sectors where Engro Fertilisers, Oil and Gas Development Company, Meezan Bank, MCB Bank and Mari Petroleum added 428 points.

On the contrary, TRG Pakistan, Dawood Hercules Corp and Interloop Limited cumulatively shed 33 points due to some stock selling, Topline added.

Arif Habib Limited (AHL), in its review, wrote that E&P stocks took their participation up a notch with solid price gains as well as topping the trading value table.

Engro Fertilisers (+4.33%), Oil and Gas Development Company (+3.4%) and Meezan Bank (+2.83%) were the biggest contributors to the index gains, it said, adding that the outlook remained positive.

JS Global analyst Mohammed Waqar Iqbal commented that the “bullish trend continued at the PSX as the KSE-100 index closed at 74,531, gaining 732 points day-on-day.”

“We expect this bullish momentum to continue and recommend investors to buy cement, textile and pharma stocks,” the analyst added.

Overall trading volumes decreased to 574.2 million shares against Monday’s tally of 721.6 million. The value of shares traded during the day was Rs23.4 billion.

Shares of 388 companies were traded. Of these, 190 stocks closed higher, 178 dropped and 20 remained unchanged.

Cnergyico PK was the volume leader with trading in 35.5 million shares, losing Rs0.11 to close at Rs4.63. It was followed by WorldCall Telecom with 29.9 million shares, losing Rs0.04 to close at Rs1.44 and K-Electric with 28.2 million shares, remaining unchanged at Rs4.64.

Foreign investors were net buyers of shares worth Rs779.7 million, according to the NCCPL.

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

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