Stocks gain on earnings hopes, power sector optimism

Stocks closed higher on Tuesday, gaining more than 500 points as investors cheered the start of the corporate earnings season and hoped for a resolution of the circular debt issue that has plagued the power sector, dealers said.

The Pakistan Stock Exchange's benchmark KSE 100-share Index ended up 0.81 percent or 515 points at 64,454.22 points, after hitting a high of 64,658.17 points and a low of 63,549.61 points during the session. The KSE-30 index also rose 0.70 percent to 21,752.21 points.

"Stocks closed higher in earnings season rally at PSX on strong rupee and foreign corporate inflows," said Ahsan Mehanti, an analyst at Arif Habib Corp.

He said the government's resolve to settle power sector circular debt and easing border tensions with India also played a catalytic role in the bullish close.

Traded shares increased by 127 million shares to 425.709 million shares from 298.699 million shares. The trading value rose to Rs24.995 billion from Rs12.515 billion.

Market capital expanded to Rs9.412 trillion against Rs9.361 trillion. Out of 354 companies active in the session, 209 closed in green, 127 in red and 18 remained unchanged.

Analyst Maaz Mulla at Topline Securities said equities experienced significant volatility with the index showing a wide range of fluctuations.

"The intra-day trading session witnessed a low of 389.80 points and a high of +718.76 points, ultimately closing at 64,454.22 levels, reflecting a gain of 514.81 points, or 0.81 percent."

He said oil and gas exploration companies faced a bearish start as investors responded unfavourably to the Ministry of Finance's rejection of the circular debt reduction plan.

"This decision was grounded in the government's commitment to the IMF, which restricts additional unbudgeted spending in the fiscal year 2023-24," he said.

However, he said a shift occurred during the second half of the day, marked by buying activity as investors seized the opportunity presented by lower stock prices.

The PPL fell 3.3 percent), PSO 2 percent and SNGP 1.8 percent. However, OGDC managed to close up 2.2 percent.

Banking and cement stocks displayed improved trading volumes, with notable performances from HBL (0.88 percent), MEBL (2.04 percent), BAFL (1.22 percent), DGKC (2.25 percent), and FCCL (2.15 percent), all closing higher than their previous day's levels.

The highest increase was recorded in Nestle Pakistan Limited, which rose by Rs80 to Rs8,350 per share, followed by Mari Petroleum Company Limited, which increased by Rs74.01 to Rs2,502.66 per share.

A significant decline was noted in Sapphire Fibres Limited, which fell by Rs120 to Rs1,480 per

share, followed by Philip Morris (Pakistan) Limited, which closed higher by Rs34.89 to Rs730.01 per share.

Analyst Muhammad Shuja Qureshi at JS Research said confusion surrounding the news of the circular debt settlement plan led to selling pressure in Pakistan Petroleum Ltd, Pakistan State Oil Co Ltd and Sui Northern Gas Pipelines Ltd. However, Oil and Gas Development Co Ltd managed to close up 2.2 percent.

"Going forward, investors are advised to book gains on the higher side and wait for dips to accumulate value stocks," he advised.

Oil & Gas Dev. remained the volume leader with 52.947 million shares which closed higher by Rs2.97 to Rs136.50 per share. Fauji Foods Ltd followed it with 44.935 million shares, which closed higher by 80 paisas to Rs10.92 per share.

Other significant turnover stocks included K-Electric Ltd., Pak Petroleum, PIAC (A), Cnergyico PK, PTCL, Pak Refinery, Fauji Fert Bin and P.S.O.

A total of 314 companies recorded future shares, of which 127 increased, 170 decreased and 17 remained unchanged.