Stocks rebound on rate cut speculation

KSE-100 index advances 447.90 points, settles at 78,987.09

KARACHI:

Ending its downward trend, the Pakistan Stock Exchange (PSX) rebounded significantly on Tuesday, driven by speculation about a potential rate cut by the State Bank of Pakistan (SBP) in its monetary policy announcement on July 29.

In the morning, trading began on a positive note, with the KSE-100 index reaching its intra-day high of 79,585.34 points. Approval of new privatisation laws by the National Assembly standing committee to avoid further delay along with postponement of a cabinet meeting for slapping ban on the opposition contributed to bullish sentiment at the bourse.

Additionally, the appreciation of Pakistan’s fiscal measures by Fitch Ratings and improving economic indicators also provided vital support to the market’s positive performance.

Although the index fell to the intra-day low of 78,634.15 points in the afternoon, it ended the day with modest gains. Major contributors to the market’s gains were exploration and production (E&P), banking and automotive sectors.

“Stocks showed recovery amid speculation about the SBP rate cut ahead of policy announcement on July 29,” said Ahsan Mehanti, MD of Arif Habib Corp.

“NA standing committee’s approval of new privatisation laws aimed at avoiding delays, postponement of a cabinet meeting for banning the opposition, appreciation of fiscal measures by Fitch Ratings and improving economic indicators played the role of catalysts in bullish close at the PSX.”

At the end of trading, the benchmark KSE-100 index recorded notable gains of 447.90 points, or 0.57%, and settled at 78,987.09.

Topline Securities, in its report, said that Pakistan’s stock market demonstrated a positive momentum as the KSE-100 index peaked at 79,585 points earlier in the day before settling at 78,987, marking a rise of 448 points, or 0.57%.

“The market’s upward trend was propelled by sectors such as E&P, banking and auto, buoyed by companies like Hub Power, Oil and Gas Development Company, Mari Petroleum, United Bank and Millat Tractors, which collectively contributed 228 points,” Topline added.

Arif Habib Limited (AHL), in its report, commented that the PSX recorded “some recovery following a sharp two-day correction, which took the KSE-100 back below 80,000.”

Some 61 shares rose while 34 fell with Hub Power (+1.91%), Oil and Gas Development Co (+1.64%) and Mari Petroleum (+1.77%) being the biggest contributors to the index gains, AHL said, adding that Habib Bank (-0.79%), Sui Northern Gas Pipelines (-2.99%) and Faysal Bank (-3.32%) were the largest drags.

JS Global analyst Mubashir Anis Naviwala noted that after a couple of bearish sessions, the PSX took a breather on Tuesday as investors took benefit of attractive valuations and pushed the KSE-100 higher by 1,046 points in initial hours.

“Moving forward, we advise investors to adopt a ‘buy-on-dips’ stance primarily in technology, fertiliser and oil stocks,” the analyst added.

Overall trading volumes decreased to 316.2 million shares compared with Monday’s tally of 375.6 million. The value of shares traded during the day was Rs17.1 billion.

Shares of 433 companies were traded. Of these, 225 stocks closed higher, 164 fell and 44 remained unchanged.

PIA Holding Company was the volume leader with trading in 22.1 million shares, losing Rs1.39 to close at Rs15.63. It was followed by Pak Elektron with 19.8 million shares, losing Rs0.33 to close at Rs26.26 and WorldCall Telecom with 19.5 million shares, losing Rs0.01 to close at Rs1.17.

Foreign investors were net buyers of shares worth Rs128.9 million, according to the NCCPL.