Stocks surge on Fitch ratings upgrade

KSE-100 index gains 798.23 points, settles at 78,827.74

KARACHI:

Contrary to last week’s trend, the Pakistan Stock Exchange (PSX) surged nearly 800 points on Monday, following upgrade of Pakistan’s long-term foreign currency issuer default rating (IDR) to “CCC+”, which was expected to stabilise the rupee and boost foreign currency inflows.

The KSE-100 index, which commenced trading at the intra-day low of 78,016.29 points, quickly rebounded owing to the ratings upgrade, coupled with expectations of a policy rate cut by the State Bank of Pakistan (SBP) later in the day.

Investors were also hopeful of an increase in credit ratings by Moody’s in light of new government initiatives.

The upbeat sentiment led to heavy buying of blue-chip stocks, propelling the market past the 79,000 mark to the intra-day high of 79,055.99 points.

Though the index closed below the 79,000 mark, it still notched up significant gains, ending the previous week’s downward trajectory.

“Stocks closed sharply higher amid Fitch Ratings’ upgrade of Pakistan’s long-term foreign currency issuer default rating (IDR) to “CCC+”, which is likely to stabilise rupee and improve foreign inflows,” commented Ahsan Mehanti, MD of Arif Habib Corp.

“Investor expectations of SBP policy rate cut and hopes of Moody’s also raising its ratings due to new government initiatives played the role of catalysts in bullish close at the PSX.”

At the end of trading, the benchmark KSE-100 index recorded an increase of 798.23 points, or 1.02%, and settled at 78,827.74.

Topline Securities, in its report, said “contrary to the last week’s trend, Pakistan equities initiated the week on a bullish note ahead of a key monetary policy meeting scheduled for Monday evening.” Across-the-board buying was witnessed in blue-chip stocks as a majority anticipated a rate reduction of 100-150 basis points in the backdrop of a declining inflation and improved macros, it said, adding that the Fitch Ratings’ upgrade came as a cherry on top for the day’s positive trend.

Arif Habib Limited (AHL), in its report, stated that there was a “strong start to the week ahead of the SBP monetary policy meeting with expectations of another rate cut.” Some 78 shares rose while 21 fell with the largest positive contribution coming from United Bank (+3.06%), Fauji Fertiliser (+3.19%) and Pakistan Oilfields (+4.62%). Hub Power (-1.14%), Engro Corp (-0.61%) and Habib Bank (-0.59%) contributed the most to the index’s decline, AHL added.

Overall trading volumes increased to 371.1 million shares compared with Friday’s tally of 278.3 million. The value of shares traded during the day was Rs19.2 billion.

Shares of 437 companies were traded. Of these, 252 stocks closed higher, 129 fell and 56 remained unchanged.

Waves Homes Appliances was the volume leader with trading in 27.9 million shares, losing Rs0.19 to close at Rs9.82. It was followed by Al-Shaheer Corp with 15.5 million shares, losing Rs0.15 to close at Rs7.03 and Dewan Motors with 14.3 million shares, gaining Rs1.96 to close at Rs43.86.

Foreign investors were net sellers of shares worth Rs230.3 million, according to the NCCPL.