Earnings season fuels PSX rally

Despite hefty foreign selling, KSE-100 index soars 578.96 points at 85,840.34

KARACHI:

Pakistan Stock Exchange (PSX) on Tuesday made a strong rebound as it advanced more than 550 points, driven by a surge in blue-chip stocks and renewed investor confidence during the ongoing corporate earnings season.

The session began on a cautious note, with the KSE-100 index dipping to the intra-day low of 84,856.21 points, reflecting the losses recorded a day ago. However, the market reversed course due to easing political tensions following the opposition's decision to call off protests.

Market optimism was further fueled by robust earnings forecasts and diplomatic engagements at the Shanghai Cooperation Organisation (SCO) summit. Additionally, rupee stability and government discussions on China-Pakistan Economic Corridor (CPEC) phase-II were also the key factors that supported the market's upturn.

As a result, the stock exchange gained pace, with the KSE-100 index surpassing the 85,000 mark and hitting its intra-day high of 85,893.99 points towards close. It ended the day near its peak with hefty gains.

"Stocks closed bullish in an earnings season rally at the PSX, led by blue-chip shares, as investors weighed a strong earnings outlook and diplomatic gains during the SCO summit," said Ahsan Mehanti, Managing Director of Arif Habib Corp.

"Easing political noise after the opposition called off protests, rupee stability and government deliberations on CPEC phase-II played the role of catalysts in positive close at the PSX."

At the close of trading, the KSE-100 index registered a rise of 578.96 points, or 0.68%, and settled at 85,840.34.

Topline Securities, in its commentary, noted that the trading session witnessed a pullback in fertiliser and exploration and production (E&P) sectors. However, investor enthusiasm remained high due to the ongoing SCO summit, with many anticipating new investment opportunities, it said.

Key contributors to the index were Mari Petroleum, Engro Fertilisers, Oil and Gas Development Company, Attock Refinery and Fauji Fertiliser, which together added 425 points, Topline added.

Arif Habib Limited (AHL), in its report, stated that the PSX saw a decline into the support zone and then went sharply higher in Tuesday's session.

Some 53 shares rose while 44 fell with Mari Petroleum (+4.92%), Engro Fertilisers (+3%) and Oil and Gas Development Company (+1.97%) making the biggest index contribution, AHL said, adding that Fauji Fertiliser (+2.02%) signed a contract to buy National Bank of Pakistan's (-0.86%) stake in Agritech, which included 106 million ordinary shares, 61.7 million convertible shares and 248.6 million non-convertible shares.

"All eyes are on Islamabad as the two-day meeting of the Council of Heads of Government of SCO member states kicks off," it noted.

JS Global analyst Mohammed Waqar Iqbal observed that the stock market closed at 85,840 points, after reaching an intra-day high of 85,894 points.

"Moving forward, the market may experience some correction due to profit-taking. Therefore, we recommend investors to book profits at current levels and wait for dips to capitalise on future buying opportunities," the analyst added.

Overall trading volumes decreased to 422.1 million shares compared with Monday's tally of 477.6 million. The value of shares traded during the day was Rs24.5 billion.

Shares of 443 companies were traded. Of these, 202 stocks closed higher, 174 declined and 67 remained unchanged.

PTCL was the volume leader with trading in 37.9 million shares, gaining Rs0.36 to close at Rs15.73. It was followed by Hub Power with 33.3 million shares, gaining Rs0.52 to close at Rs98.83 and Kohinoor Spinning Mills with 22.5 million shares, gaining Rs0.73 to close at Rs7.59.

During the day, foreign investors sold shares worth Rs379.6 million, according to the National Clearing Company of Pakistan Limited (NCCPL).