Stocks at record over easing mini-budget fears

KARACHI:

Investor activity picked up on Friday as the Pakistan Stock Exchange (PSX) saw a strong rally that took the KSE-100 index to a record high as concerns over a potential mini-budget eased.

Following continuous fluctuations in early trading, investor confidence propelled the index to the intra-day peak of 95,278.27 points. However, profit-taking later led to a slight pullback, wiping off the day's gains.

The upward momentum appeared to be driven by growing economic optimism, following reports that the International Monetary Fund (IMF) had no concerns about Pakistan's revenue collection targets.

The rally was further supported by an increase of $84 million in the State Bank of Pakistan's foreign exchange reserves that reached $11.26 billion.

Leading analyst Mohammad Sohail attributed the KSE-100's sustained upward momentum to a shift in investor focus towards equities, driven by the declining returns on fixed-income securities.

"Stocks reached a new all-time high amid receding fears of a mini-budget and relief in the additional tax levy on the banking sector," Ahsan Mehanti of Arif Habib Corp commented.

Falling bank lending rates, rising foreign exchange reserves and rupee stability also played a key role in bullish activity at the PSX, he added.

At the close of trading, the benchmark KSE-100 index recorded a surge of 571.75 points, or 0.61%, to 94,763.64.

Topline Securities, in its report, noted that the KSE-100 index extended gains as the banking sector continued to garner investor interest on news that the Islamabad High Court had temporarily barred the government from collecting an additional tax of up to 15% from banks if lending to the private sector was lower than the target.

In terms of traded value, Pakistan State Oil (PSO, Rs2.86 billion), Attock Petroleum (Rs2.24 billion), TRG Pakistan (Rs1.76 billion), Hub Power (Rs1.30 billion) and Oil and Gas Development Company (OGDC, Rs1.29 billion) led the activity, it said.

Top contributors to the index in terms of points were United Bank Limited (UBL), Habib Bank Limited (HBL) and Meezan Bank, which together contributed 301 points, Topline added.

In its report, Arif Habib Limited (AHL) highlighted that the KSE-100 marked another week of new highs, gaining 1.45% week-on-week.

On Friday, 59 stocks advanced while 38 declined. The biggest contributors to the index were UBL (+2.24%), HBL (+2.56%) and Meezan Bank (+1.83%).

On the downside, GlaxoSmithKline (-4.2%), Millat Tractors (-1.18%) and Dawood Hercules (-0.85%) pulled the index down.

Banks outperformed the market, benefiting from the temporary tax relief granted by the court. Immediate support is seen around the 94,000 index level, with expectations for further gains, AHL added.

JS Global analyst Mubashir Anis Naviwala wrote that the KSE-100 surged to a new all-time intra-day high of 95,278, finally breaking through the crucial 95,000 resistance level. The index closed at 94,764, up 572 points, with trading volume of 893 million shares.

Looking ahead, the analyst suggested a buy-on-dips strategy, focusing on sectors such as banking, exploration and production, pharma and fertiliser.

Overall trading volumes decreased to 893.2 million shares against Thursday's tally of 1.08 billion. The value of shares traded during the day was Rs30.8 billion.

Shares of 473 companies were traded. Of these, 204 stocks closed higher, another 204 declined and 65 remained unchanged.

WorldCall Telecom was the volume leader with trading in 78 million shares, losing Rs0.04 to close at Rs1.34. It was followed by Fauji Foods with 70.7 million shares, gaining Rs1.06 to close at Rs11.61 and Hascol Petroleum with 55.5 million shares, gaining Rs0.03 to close at Rs8.24.

During the day, foreign investors were sellers of a net Rs344.1 million worth of shares, according to the NCCPL.