Stocks rally on upbeat economic data, rate cut hopes

Stocks gained over one percent on Thursday, boosted by positive economic data on home remittances and a drop in government bond yields, dealers said.

The Pakistan Stock Exchange’s benchmark KSE 100-share Index gained 1.09 percent or 697.72 points to end at 64,617.57 points. The highest index of the day remained at 64,700.97 points while the lowest level was recorded at 63,914 points. The KSE-30 index also surged 238.65 points or 1.12 percent to close at 21,579.53 points.

“Bullish activity witnessed amid a slump in government treasury bond yields up to 59 basis points and upbeat economic data on home remittances surging by 13 percent to $2.38 billion in December,” said analyst Ahsan Mehanti at Arif Habib Corp.

"Surging exports, shrinking trade deficit and investor speculations ahead of major earning announcements due next week played a catalytic role in the bullish close." Traded shares decreased by 50 million shares to 586.548 million shares from 636.168 million shares. The trading value decreased to Rs17.024 billion from Rs17.980 billion. Market capital expanded to Rs9.447 trillion against Rs9.336 trillion. Out of 360 companies active in the session, 204 closed in green, 131 in red and 25 remained unchanged.

Analyst Naveed Nadeem at Topline Securities said investor optimism was fuelled by expectations of a positive outcome from the meeting with the International Monetary Fund (IMF) regarding the second loan tranche of $700 million.

“Additionally, the Wednesday T-Bills auction indicated a market inclination towards an anticipated interest rate cut in the upcoming months, evident from substantial participation as investors sought higher yields,” Nadeem said.

The total participation reached around Rs2.75 trillion before the expected rate drop. As a result, MARI, PPL, OGDC, HBL, and HUBC collectively contributed 406 points to the index. The highest increase was recorded in Mari Petroleum Company Limited, which rose by Rs157.28 to Rs2,254.39 per share, followed by Pak Suzuki Motor Company Limited, which increased by Rs62.69 to Rs898.57 per share. A significant decline was noted in Sapphire Fibres Limited, which fell by Rs34.10 to Rs1,749.90 per share, followed by Pakistan Tobacco Company Limited, which closed lower by Rs23.60 to Rs1,117.40 per share.

Muhammad Shuja Qureshi, an analyst at JS Research, said the market closed positive after three consecutive negative sessions. “A drop in T-bill yields turned investor sentiment positive as they hope for a rate cut in the coming monetary policy meeting,” Qureshi said. “Investors are advised to accumulate value stocks on dips.”

Brokerage Arif Habib Ltd said despite marginal changes throughout the week, positive news from the IMF is anticipated to inject momentum into the Friday session, potentially culminating in a new weekly high for the index. "This dynamic hints at the significance of external factors in influencing short-term market movements,".

K-Electric Ltd. remained the volume leader with 198.544 million shares which closed higher by 29 paisas to Rs6.01 per share. P.I.A.C. (A) followed it with 33.897 million shares, which closed higher by Re1 to Rs10.99 per share.

Other significant turnover stocks included Pak Int. Bulk, WorldCall Telecom, Hascol Petrol, Pak Petroleum, Pak Refinery, Treet Corp, Cnergyico PK and Agritech Limited. A total of 312 companies recorded future shares, of which 199 increased and decreased and 18 remained unchanged.