Political stability drives stocks higher

Index goes up 573 points, aided by encouraging economic cues

KARACHI:

Bulls dominated proceedings at Pakistan Stock Exchange (PSX) on Monday as investors took encouragement from relative political stability and a marked improvement in macroeconomic indicators.

Market players resorted to cherry-picking of stocks, helping the KSE-100 index to add over 550 points to its tally. Current account surplus, a significant increase in foreign direct investment (FDI) and expectations of a further policy rate reduction were among the triggers that drove the market higher.

The index consistently fluctuated throughout the day and hit its intra-day low at 115,668.08 points in the very first hour of trading. It recovered very swiftly, reaching the day's peak at 116,276.42 after midday.

"Stocks closed bullish in an earnings season rally amid upbeat data showing a $1.2 billion current account surplus and 20% surge in FDI to $1.33 billion for July-December 2024," said Ahsan Mehanti of Arif Habib Corp.

"Easing political risks and speculation about progress in negotiations between the government and Pakistan Tehreek-e-Insaf for a political deal played the role of catalysts in the rise at the PSX," he said. At the end of trading, the benchmark KSE-100 index registered an increase of 572.73 points, or 0.50%, and settled at 115,844.82.

Topline Securities, in its review, said bulls decisively regained control of the bourse, propelling the index to an impressive intra-day high of 1,004 points before closing at 115,845, a gain of 573 points.

"This upward momentum was fuelled by strengthened investor confidence due to political stability that eased uncertainties," it said. Additionally, anticipation of rate cut in the upcoming monetary policy meeting, scheduled for January 27, further amplified positive sentiment, driving broad-based optimism across key sectors.

Arif Habib Limited (AHL) reported that trading on Monday saw the KSE-100 move through the upper end of the 112k-115.5k range and should now push towards new highs.

Some 59 shares rose while 37 fell with FFC (+1%), Engro Holdings (+3.31%) and Meezan Bank (+1.58%) contributing the most to index gains. Conversely, Mari Petroleum (-0.87%), Pakistan Petroleum (-0.97%) and Systems Limited (-1.04%) were the biggest drags.

AHL cited a report saying Pakistan's deal with Saudi Arabia for the sale of a stake in the copper and gold mining project controlled by Barrick Gold was still in the process, where key details were being negotiated, including where the minerals would be processed. The government hopes the deal will extend beyond exploration to include some of the downstream activities within the country, according to Petroleum Minister Musadik Malik.

Insight Securities Head of Sales Ali Najib remarked that PSX had an easygoing day as the KSE-100 index closed at 115,845, translating into a gain of 573 points, or 0.50%. "The benchmark index remained in the green zone throughout the day," he said.

Investors opted to do some cherry-picking in blue-chips stocks ahead of an important global event – the oath-taking ceremony for newly elected US President Donald Trump, he pointed out.

JS Global analyst Muhammad Hasan Ather commented that the KSE-100 surged 1,004 points to reach the intra-day high of 116,276.

"This rise was driven by easing political uncertainty, improving macroeconomic indicators and expectations of a supportive monetary policy," he said. "Investor sentiment was further bolstered by a robust C/A surplus and plans to strengthen Pakistan's presence in international financial markets."

Overall trading volumes increased to 675.05 million shares against Friday's tally of 549.6 million. The value of shares traded during the day was Rs37.5 billion.

Shares of 454 companies were traded. Of these, 241 stocks closed higher, 157 fell and 56 remained unchanged.

Lotte Chemical was the volume leader with trading in 59.5 million shares, up Rs1.89 to close at Rs23.23. It was followed by Bank Makramah with 57.8 million shares, gaining Rs0.70 to close at Rs3.40 and WorldCall Telecom with 56.9 million shares, remaining unchanged at Rs1.87. Foreign investors sold shares worth Rs308.6 million.