Bulls return on economic recovery hopes

KSE-100 index posts gains of 485.68 points, settles at 78,225.98

KARACHI:

Bulls staged a comeback at the Pakistan Stock Exchange (PSX) on Friday as the KSE-100 index rose around 500 points, boosted by improved economic data and optimism about a further reduction in the State Bank of Pakistan (SBP) policy rate.

The market’s surge above 78,000 points was driven by strong performances by stocks in power, exploration and production, banking, technology, oil marketing companies, fertiliser, chemical and pharmaceutical sectors.

A major positive for the bourse was the appreciation of the Pakistani rupee, which gained Rs0.16 in the inter-bank market. Similarly, the pace of Sensitive Price Indicator (SPI)-based inflation slowed to 0.12% week on week.

Meanwhile, the cement sector experienced a slump as the government of Punjab revised up the royalty on cement and clinker to 6% per ton.

The KSE-100 index fell to the intra-day low of 77,926.54 points before midday but it was able to make a smart recovery later in the day, when it reached the intra-day high of 78,434.17.

“Stocks closed sharply higher following upbeat CPI inflation data, which showed an 11.1% year-on-year increase for July 2024. This is likely to trigger a further reduction in the SBP policy rate,” stated Ahsan Mehanti, MD of Arif Habib Corp.

“Cement sector received a battering after the government of Punjab revised royalty rates to 6% per ton on cement and clinker,” he said.

“Rupee’s recovery amid a surge in forex reserves, hopes of IMF board’s approval of the $7 billion Extended Fund Facility by the end of this month and reports of a surge in exports by 12% YoY in July played the role of catalysts in bullish close at the PSX.”

At the end of trading, the benchmark KSE-100 index registered an impressive rise of 485.68 points, or 0.62%, and settled at 78,225.98.

Topline Securities, in its report, commented that the stock market largely traded in the positive zone and closed at 78,226, up 0.62%.

Major positive contribution to the index came from Hub Power, Habib Bank, United Bank, Oil and Gas Development Company and National Foods, which cumulatively contributed 253 points.

On the other hand, Bank AL Habib, Pakistan Services, Millat Tractors, Fauji Fertiliser and Dawood Hercules Corporation lost ground, erasing 151 points from the index, Topline said.

Arif Habib Limited (AHL), in its report, highlighted that the “KSE-100 remained flat week-on-week after experiencing three consecutive weeks of decline, with prices finding support in the 77,500-78,000 range. The index reached a low of 77,595 during the week but closed above 78,000.”

On Friday, 70 shares rose while 26 fell with Hub Power (+1.76%), Habib Bank (+1.98%) and United bank (+1.2%) being the biggest upside contributors.

On the flip side, Bank AL Habib (-1.07%), Pakistan Services (-4.74%) and Dawood Hercules (-1.3%) were the largest drags, it wrote.

Furthermore, the Punjab government approved a 6% royalty on limestone and argillaceous clay, up from a fixed rate of Rs20 per bag. The change increased the royalty to Rs66 per bag, adding Rs46 in costs for cement companies.

“Closing above 78,000 is a positive sign and suggests potential upside for next week, with momentum in refineries likely to persist,” AHL predicted.

JS Global analyst Mohammed Waqar Iqbal said that following a series of negative sessions, bullish activities were observed at the PSX.

“We expect range-bound activity to continue, with potential fluctuations driven by corporate results. Consequently, investors are advised to adopt a wait-and-see approach,” the analyst added.

Overall trading volumes increased to 443.5 million shares compared with Thursday’s tally of 278.99 million. The value of shares traded during the day was Rs20.5 billion.

Shares of 439 companies were traded. Of these, 236 stocks closed higher, 142 fell and 61 remained unchanged.

Cnergyico PK was the volume leader with trading in 66.99 million shares, gaining Rs0.55 to close at Rs4. It was followed by The Organic Meat Company with 18.6 million shares, gaining Rs4 to close at Rs44.67 and Pak Elektron with 17.3 million shares, gaining Rs1.13 to close at Rs26.81.

Foreign investors sold shares worth a net Rs188.9 million, according to the NCCPL.