Loan rollover helps stocks extend gains

The Pakistan Stock Exchange (PSX) ended Tuesday's trading session on a highly positive note as UAE loan rollover, easing geopolitical worries and buying by local institutions helped extend the market's recovery.

There was a reversal of the recent trend, where buyers continued to absorb selling pressure and pushed the KSE-100 index higher by nearly 1,850 points. Concerns over US-Iran tensions, rollover-related selling and caution ahead of corporate results subsided, while trading volumes showed signs of improvement.

According to data, consistent buying by local institutional investors played a key role in underpinning confidence. During the day, the benchmark index traded between the high of 187,519 and low of 185,546. It closed at 186,901, up 1,843 points, or 1%.

Topline Securities commented that bulls kept their momentum alive as the KSE-100 surged to the intra-day high of 2,460 points before settling at 186,901, marking a solid gain of 1,843 points. The upbeat tone was attributed to sustained buying by local institutions, as highlighted by Monday's data from the National Clearing Company.

Fauji Fertiliser, United Bank, Engro Holdings, Meezan Bank and Systems Limited were the top positive contributors, adding 734 points to the benchmark index, Topline wrote.

KTrade Securities observed that the PSX closed on a strong note, gaining 1% day-on-day. Market participation improved with 390 million shares traded on the KSE-100. Over the past few sessions, the market has shown a clear reversal of trend as pressure from the US-Iran tensions, rollover-related selling and results-season caution appears to be easing, it said.

Sector-wise, commercial banks, fertiliser, technology and pharmaceuticals led the gains. KTrade expects the positive momentum to continue, provided the geopolitical situation remains stable, while improving sentiment and rising retail participation could further support the market.

JS Global analyst Muhammad Hasan Ather said the bullish momentum was primarily driven by easing inflationary pressures with December inflation dropping to 5.6% and heightened investor anticipation of further rate cuts following the State Bank's recent pause at 10.5%.

With the GDP growth stabilising and the current account deficit under control, the market is fundamentally positioned for further re-rating. Sustained structural reforms and a shift in liquidity from fixed income to equities suggest that the index remains on a strong path, he added.

Arif Habib Limited Deputy Head of Trading Ali Najib stated that the PSX extended its positive momentum, when the KSE-100 advanced 1,843 points. Investor sentiment was buoyed by record goods exports, which exceeded $3 billion, underscoring continued improvement on the macroeconomic front. Additionally, the UAE rolled over loans worth $2 billion for one month as Pakistan sought to renegotiate the debt terms.

He mentioned that fertiliser offtake remained subdued in January, reflecting front-loaded Rabi season demand and earlier discounts that resulted in elevated dealer inventories. Urea offtake declined 52% year-on-year (YoY) to 214k tons, while di-ammonium phosphate (DAP) sales fell 37% YoY to 39k tons.

The outlook remains intact, with the index likely to continue its upward trajectory towards the recent peak of 191,000, supported by improving economic indicators and expectations of better-than-anticipated corporate results, subject to the absence of any adverse geopolitical developments, Najib stated.

Overall trading volumes increased to 848.6 million shares against Monday's total of 740.1 million. The value of shares traded during the day was Rs50 billion.

Shares of 486 companies were traded. Of these, 294 stocks closed higher, 145 dropped and 47 remained unchanged.

K-Electric was the volume leader with trading in 99.5 million shares, rising Rs0.24 to close at Rs7.35. It was followed by First National Equities with 91.4 million shares, gaining Rs0.09 to close at Rs1.74 and The Bank of Punjab with 86.3 million shares, climbing Rs1.54 to close at Rs40.04. Foreign investors sold shares worth Rs286.8 million, the National Clearing Company reported.