Stocks surge 2,100 points on oil price dip

Easing Gulf situation drives optimism; investors focus on banking, cement, fertiliser sectors

KARACHI:

Renewed investor optimism lifted the Pakistan Stock Exchange (PSX) on Monday as the benchmark KSE-100 index surged more than 2,100 points, driven by a robust buying momentum across major sectors following a sharp decline in international oil prices.

The KSE-100 settled at 178,200.02, gaining 2,105.91 points, or 1.20%, compared to the previous close at 176,094.12. It touched the intra-day high of 178,985.95 while the day's low was 177,759.88.

Buying remained broad-based throughout the session, with commercial banks, oil marketing companies, cement, fertiliser, oil and gas exploration companies and power generation stocks leading the advance and underpinning the market's positive performance.

Investor sentiment improved after international crude oil prices fell more than $4 a barrel as US President Donald Trump refrained from launching a fresh attack on Iran, opting instead to pursue a diplomatic agreement aimed at curbing Tehran's nuclear programme and reopening the Strait of Hormuz. Meanwhile, the Pakistan Bureau of Statistics (PBS) released inflation data that showed a drop in July headline inflation to 9.2% from 11.1% a month ago.

KTrade Securities observed that the 2,106-point, or 1.20%, gain in the KSE-100 index over the previous session came as easing geopolitical tensions in the Middle East boosted investor confidence.

Investor sentiment strengthened after the latest signs of de-escalation between the United States and Iran triggered a sharp decline in global oil prices. Brent crude fell about 4.5% to slightly above $83 per barrel, fuelled by remarks from Iranian Foreign Minister Abbas Araghchi that discussions between Tehran and Oman on the management of the Strait of Hormuz were in final stages.

Among individual stocks, Fauji Fertiliser, Meezan Bank, Lucky Cement, Pakistan Petroleum and Engro Holdings were the largest contributors to the index's advance. Sector-wise, commercial banks, investment banks, cement and fertiliser companies provided the strongest support.

Looking ahead, KTrade expected investors to keep a close watch on geopolitical developments as progress towards a US-Iran agreement could provide further support to market sentiment, while any renewed escalation may trigger a more cautious investment stance.

"We expect the KSE-100 index to continue its recently built momentum as investor focus shifts towards improving economic indicators amid easing geopolitical tensions," AKD Securities' Director Research Mohammed Awais Ashraf commented.

Foreign investors turned net buyers following a hiatus of 23 months, supported by improving macroeconomic conditions and the appreciation of the Pakistani rupee over the past 13 months. "We advise investors to focus on banks, E&P, fertiliser, textile, OMC, technology, steel and automobile sectors," he added.

Arif Habib Limited (AHL) wrote that weekend optimism lifted the global risk appetite, helping the KSE-100 index gain 1.2% at the start of the week. Seventy-nine stocks advanced and 20 declined, where Fauji Fertiliser (+1.32%), Meezan Bank (+1.47%) and Lucky Cement (+1.85%) led the index's gains. On the other side, Nestle Pakistan (-1.8%), MCB (-0.2%) and Colgate-Palmolive (-1%) weighed on the benchmark index.

Investor sentiment was supported by reports of progress in negotiations over shipping through the Strait of Hormuz. Meanwhile, the headline inflation stood at 9.2% year-on-year in July while the monthly reading rose 1.2%. Additionally, Pakistan's cement sales increased 6% to 4.5 million tons. "The demand zone remains intact, keeping the near-term 180,000-point target for the KSE-100 in sight," AHL said.

Overall trading volumes decreased to 785.4 million shares compared with the previous tally of 881 million. The value of traded shares stood at Rs33.1 billion.

In the ready market, shares of 493 companies were traded. Of these, 305 stocks closed higher, 152 fell and 36 remained unchanged.

Trust Brokerage was the volume leader with trading in 113.3 million shares, losing Rs0.06 to close at Rs2.51. Foreign investors bought shares worth Rs601.7 million, the National Clearing Company reported.