Stocks rally sharply in Eid-shortened week

Index surges nearly 3,900 points over regional optimism, robust investor interest

KARACHI:

In yet another powerful recovery, Pakistan equities on Monday extended their bullish momentum as strong buying interest lifted the benchmark KSE-100 index sharply higher, which gained nearly 3,900 points amid improving regional situation and investor optimism during a trading week shortened by upcoming Eidul Azha holidays.

The market opened on a volatile note, when the index recorded sharp swings due to profit-taking. However, buying interest quickly emerged, helping the market to wipe out losses and advance on a firm upward trajectory for the rest of the session. Investor sentiment remained upbeat after reports indicated progress towards a peace agreement between the United States and Iran, which lifted confidence across regional markets and improved risk appetite.

The benchmark touched the intra-day high of 171,920.81 points while the day's low was 170,161.66. At close, the KSE-100 index registered a significant growth of 3,881.05 points, or 2.31%, to settle at 171,725.29.

KTrade Securities, in its report, observed that the KSE-100 index rose 3,881 points (+2.31%) as broad-based buying returned and lifted sentiment across the market. Activity improved following positive developments over the weekend in US-Iran peace talks and expectations of reaching an interim understanding in the coming days. Easing geopolitical concerns supported a decline in international oil prices, with Brent trading around $94-98 per barrel, a sigh of relief for oil-importing economies such as Pakistan, it said.

Taking cue from Asian markets, the PSX traded positive since the opening. Sector-wise, gains were led by commercial banks, cement and oil & gas, with major contribution coming from Fauji Fertiliser, United Bank, Habib Bank, Engro Holdings, Lucky Cement, Bank AL Habib and Meezan Bank. Looking ahead, KTrade expected the market direction to remain linked with developments on the US-Iran front and oil prices.

Arif Habib Limited (AHL) commented that the KSE-100 hit a pre-Eid target of 171.5k in a strong session where it surged 2.31%. A total of 92 shares rose while five fell with Fauji Fertiliser (+1.98%), UBL (+2.34%) and HBL (+4.52%) contributing the most to the index gains.

In geopolitical developments, the US and Iran were inching closer to a deal to extend their ceasefire and reopen the Strait of Hormuz, but officials from both sides signalled they still needed to negotiate certain points. A consensus was reached on many of the topics discussed, but no one could claim that the signing of an agreement was imminent, said the spokesman for Iran's Foreign Ministry.

Meanwhile, Prime Minister Shehbaz Sharif in his meeting with Chinese Premier Li Qiang said strategic cooperative partnership with China remained the cornerstone of Pakistan's foreign policy. "We should see further developments ahead of the market reopening on Friday as positive news flow during the holiday period can help the market open gap up and through 175k," AHL concluded.

According to Topline Securities, investor confidence improved significantly following positive developments over the weekend regarding negotiations between the United States and Iran, with reports indicating that discussions may reach a conclusion in the near term. Sentiment was further bolstered by a sharp decline in international oil prices, which fell by nearly $6 per barrel.

The bullish momentum was primarily driven by heavyweight stocks including Habib Bank Ltd, Fauji Fertiliser, United Bank Ltd, Engro Holdings and Lucky Cement, which collectively contributed 1,315 points.