Stocks stage sharp rebound on optimism ahead of IMF board meeting

Stocks bounced back strongly on Friday, lifted by growing confidence ahead of the IMF Executive Board meeting and easing tensions along the border, as investors anticipated a hassle-free nod to Pakistan’s loan request.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 Index surged by 3.52%, or 3,648 points, to settle at 107,174.63.

The index hit an intraday high of 107,541.45 and a low of 102,420.82, reflecting strong bullish sentiment throughout the session. Total traded volume stood at 238.4 million shares, while the value of shares traded clocked in at Rs22 billion.

“After falling sharply by 6% yesterday due to drone attacks, stocks recovered 2% in the first 30 minutes of trading on Friday," said Topline Securities CEO Mohammad Sohail.

"So far, there has been no news of any major escalation helping in restoring confidence,” he added.

The brokerage in a post-market note said that this recovery was on account of optimism on the IMF Executive Board meeting scheduled to consider the loan programme, where the market was mostly expecting a smooth approval.

"Overall decline in cross-border hostilities also provided stimulus to investor sentiment," the report added.

Investor focus is firmly fixed on the IMF Executive Board meeting taking place today, where a $1.3 billion disbursement under Pakistan’s ongoing 37-month Extended Fund Facility (EFF) is up for approval.

The Board will also consider Islamabad’s request to modify performance criteria and to access funds under the Resilience and Sustainability Facility (RSF). The IMF and the Government of Pakistan reached a staff-level agreement in March during the first review of the $7 billion programme.

If approved, the upcoming tranche would bring total disbursements to approximately $2 billion.

Friday’s movements come a day after the PSX suffered its worst single-day decline in history, as the KSE-100 Index plunged by 6,482.21 points, or 5.89%, to close at 103,526.81 on Thursday.

The market’s circuit breaker was activated after the KSE-30 Index fell more than 5% in five consecutive minutes, leading to a one-hour trading halt.

During Thursday’s session, the KSE-100 had reached a high of 111,881.03 and fell as low as 101,598.91 points.