Stocks recover due to earnings season boost

Investor optimism leads to 1,055-point surge in index

KARACHI:

Pakistan Stock Exchange (PSX) on Monday made a notable recovery in an earnings season rally as investors closely monitored progress on key International Monetary Fund (IMF) targets.

Analysts highlighted that the achievement of goals such as the primary budget surplus and provincial net revenue collection contributed to the market's positive momentum ahead of the upcoming IMF review.

Ahsan Mehanti of Arif Habib Corp commented that stocks made a recovery in the earnings season rally as investors assessed the achievement of IMF's targets, including the primary budget surplus, provincial revenue collection and cash surplus ahead of review talks.

He added that investor expectations about further SBP policy easing next month and government's deliberations on the privatisation of SOEs played the role of catalysts in bullish close at the PSX.

At the end of trading, the benchmark KSE-100 index recorded a surge of 1,055.03 points, or 0.96%, and settled at 111,377.97. In its market review, Topline Securities stated that the week commenced on a positive note as bulls made a strong comeback, driving the index to the intra-day high of 1,299 points before settling at 111,378, an increase of 1,055 points.

The surge was primarily fuelled by better-than-expected corporate earnings, which bolstered investor sentiment and created renewed buying interest across key sectors, the brokerage house noted.

Adding to the optimism, the Zarea book-building process received a positive response, further lifting the market sentiment and attracting fresh capital inflows.

The uptick was largely driven by strong performances by Mari Petroleum, Engro Holdings, Hub Power, Pakistan Petroleum and Attock Refinery, which collectively contributed 448 points to the index, Topline commented. Arif Habib Limited (AHL), in its report, noted that the KSE-100 index opened the week with gains, staging a comeback following persistent selling last week.

Some 71 shares rose while 26 fell, with Mari Petroleum (+3.29%), Hub Power (+2.29%) and Pakistan Petroleum (+2.25%) contributing the most to the index gains. On the other hand, MCB Bank (-0.92%), Pakistan Oilfields (-0.62%) and Pakgen Power (-2.69%) were the biggest drags, it said.

AHL added that Engro Fertilisers (+1.15%) reported CY24 earnings per share (EPS) of Rs21.16, up 8% year-on-year, and 4QCY24 EPS of Rs7.70, down 8% year-on-year. Alongside the result, the company announced a final cash dividend of Rs8 per share (Rs21.50 per share for CY24).

Ali Najib of Insight Securities commented that post-last week's sell-off, the PSX had a positive day on Monday. Investors opted to cherry-pick blue-chip stocks at attractive price levels, offering handsome dividend yields. The trend could be attributed to better-than-anticipated corporate announcements in the current result season, he said.

In addition, Najib pointed out, the finance ministry's confirmation regarding IMF conditions where the country managed to comply with three out of five major conditions for the first review, also provided confidence to the investor community.

Overall trading volumes increased to 415.2 million shares compared with Friday's tally of 299.7 million. Shares of 429 companies were traded. Of these, 198 stocks closed higher, 172 fell and 59 remained unchanged.

The Bank of Punjab was the volume leader with trading in 55.9 million shares, rising Rs0.67 to close at Rs10.28. It was followed by WorldCall Telecom with 34.1 million shares, remaining unchanged at Rs1.53 and Cnergyico PK with 31.4 million shares, gaining Rs0.27 to close at Rs7.53. During the day, foreign investors sold shares worth Rs652.1 million, the NCCPL reported.