Stocks recover on positive economic data

KSE-100 index gains 690.39 points, settles at 81,804.59

KARACHI:

Pakistan Stock Exchange (PSX) made a handsome recovery on Tuesday as the KSE-100 index rose nearly 700 points in a rally fueled primarily by positive economic indicators.

In the morning, trading began on a lacklustre note owing to prior losses, with the index dipping to its intra-day low of 81,119.24 points. However, the momentum shifted when investors responded favourably to new economic numbers.

These included a year-on-year (YoY) decrease in the Consumer Price Index (CPI)-based inflation to 6.9% for September 2024, down from 9.6% in August, signalling potential policy rate cut by the State Bank of Pakistan (SBP) in the next monetary policy.

Additionally, the declining petroleum product prices and rising foreign exchange reserves also powered the bullish sentiment. Consequently, the KSE-100 climbed to the intra-day high of 81,980.36 points in the final trading hour and closed with significant gains.

"Stocks closed bullish, led by across-the-board buying, amid upbeat data showing 6.9% YoY CPI inflation for September 2024, which is expected to trigger a further reduction in the SBP policy rate," said Ahsan Mehanti, Managing Director of Arif Habib Corp. "Falling local petroleum prices and surging forex reserves played the role of catalysts in bullish close at the PSX."

At the end of trading, the KSE-100 index recorded an increase of 690.39 points, or 0.85%, and settled at 81,804.59. Topline Securities, in its commentary, said that Tuesday's session was dominated by the bulls where key drivers of the rally were heavyweights such as Hub Power, Mari Petroleum, Oil and Gas Development Company, Bank AL Habib and Pakistan Petroleum. They collectively contributed 533 points to the index.

Conversely, Bank Alfalah, Habib Bank, Pakistan Oilfields, United Bank and Meezan Bank pulled the index down by 170 points, it said. On the economic front, the CPI for September recorded a YoY increase of 6.9%, down from 9.6% in August, marking the lowest inflation reading in 44 months, Topline added.

Arif Habib Limited (AHL), in its report, wrote that the upside resumed from the support zone with the KSE-100 again closing in on 82,000. Some 67 shares rose while 30 fell with Hub Power (+5.97%), Mari Petroleum (+5.3%) and Oil and Gas Development Co (+1.83%) contributing the most to the index gains.

Bank Alfalah (-3.74%), Habib Bank (-1.65%) and Pakistan Oilfields (-1.21%) were the largest index drags, AHL said, adding that Mari Petroleum post-stock split had become far more liquid and "affordable" on the most value traded table.

JS Global analyst Mohammed Waqar Iqbal said that the positive momentum was driven by expectations of a further policy rate cut, supported by an improved inflation outlook. "Looking ahead, we recommend investors to take advantage of any market dips as a buying opportunity," the analyst added.

Overall trading volumes increased to 359.1 million shares compared with Monday's tally of 297.99 million. The value of shares traded during the day was Rs17.2 billion.

Shares of 436 companies were traded. Of these, 243 stocks closed higher, 139 declined and 54 remained unchanged.

Fauji Cement was the volume leader with trading in 29.1 million shares, gaining Rs1.34 to close at Rs26.62. It was followed by Hub Power with 19.6 million shares, gaining Rs7.13 to close at Rs126.47 and WorldCall Telecom with 19.05 million shares, gaining Rs0.04 to close at Rs1.24.

During the day, foreign investors sold shares worth Rs1.38 billion, according to the NCCPL.