Stocks break bear-hug on IMF bailout timeframe

KARACHI: Stocks on Wednesday wriggled out of a multi-session long bear-hug to reclaim over 2.4 percent after finance minister gave out a somewhat definitive update on the IMF bailout process and other potential financing opportunities, triggering a much-needed rally, dealers said.

Topline Securities in its daily market review Investors’ confidence was mainly influenced by the finance minister’s remarks that International Monetary Fund (IMF) loan would take two months to be approved, which should also be accompanied by funds worth $5 billion from World Bank and Asian Development Bank.

“Sector-wise, fertilisers, commercial banks and oil and gas exploration companies helped propel the market adding 436 points cumulatively,” the brokerage said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Shares Index gained 2.68 percent or 983.96 points to close at 37,647.34 points, while its KSE-30 shares index followed the suit with a rise of 2.52 percent or 447.07 points to end at 18,158.38 points.

As many as 385 scrips were astir today, of which 324 moved up, 46 retreated, and 15 remained unchanged. The ready market volumes stood at 194.167 billion shares as compared with the turnover of 181.729 billion in the previous session.

Shumaila Badar, head of research at Ismail Iqbal Securities, said the market rallied on assurances given by the finance minister about the economy, and positive expectations from the meetings between the PSX’s delegation and the government. Auto sector rallied because Indus Motor Company announced a hike in car prices, which bodes well for other assemblers too as they may follow suit, Badar said.

She added that textiles also performed well due to the government's assurance that they would be given preference in gas supply. “We expect some profit booking after Wednesday’s rally,” she said.

The PSX, which has lost nearly 4200 points in the last 12 sessions, saw some healthy recovery on the back of Finance Minister Asad Umar’s statement that the government was taking all measures to fill the funding gap of $12 billion during the current fiscal year.

Umar said the IMF team was expected to arrive for two weeks in November and after talks they would propose a loan package for the country. He also pointed out that by the end this week a meeting had been scheduled with the brokers association where proposals would be discussed to boost investor confidence.

Another positive vibe arrived from the brokers’ meeting with the officials of the Securities Exchange Commission. The meeting discussed proposal for reducing capital value tax rate, reviewing capital gains tax regime, and allowing tax breaks to companies interested in listing at the PSX.

Investors also took a sigh of relief after rupee movement was checked and it remained oscillating between Tuesday’s levels of Rs133.75 to Rs133.85, an analyst said.

Murtaza Jafar, an analyst with Elixir Securities, said after recovery, all eyes were now on the weekend meeting between PSX Stock Brokers Association and finance minister.

The highest gainers were Rafhan Maize, up Rs299.00 to close at Rs7299.00/share, and Indus Motor, up Rs52.86 to finish at Rs1110.24/share.

Companies that booked highest losses were Pakistan Tobacco, down Rs125.00 to close at Rs2375.00/share, and Shifa International Hospital, down Rs6.06 to close at Rs269.19/share. TRG Pakistan Limited recorded the highest volumes with a turnover of 22.105 million shares. The scrip gained Rs1.04 to close at Rs21.94/share. The lowest volumes were witnessed in Aisha StelCop/s, recording a turnover of 6 million shares, and losing Rs0.3 to end at Rs10.90/share.