Stocks rally before vote, but caution prevails

Stocks closed higher on Wednesday, boosted by a pre-election rally and hopes of an upgrade in the country’s credit rating, but trading volumes remained thin as investors stayed cautious ahead of the polls.

The Pakistan Stock Exchange's (PSX) benchmark KSE 100-share Index gained 344.85 points or 0.54 percent to close at 64,143.87 points. The highest index of the day remained at 64,196.62 points while the lowest level was recorded at 63,927.29 points.

The KSE-30 index also increased by 111.43 points or 0.52 percent to 21,711.61 points.

“Stocks closed higher in the pre-election rally amid speculations over S&P global rating projections for an upgrade to ‘B’ post elections,”said analyst Ahsan Mehantiat Arif Habib Corp.

"An upbeat economic outlook, strong earnings in the oil and banking sector and the government's resolve over the circular debt issue played a catalytic role in the bullish close."

S&P Global Ratings is expected to review Pakistan’s sovereign rating post election and media reported that it could raise it to ‘B’ if the new government shows commitment to fiscal reforms and an International Monetary Fund (IMF) programme.

Traded shares decreased by 3 million shares to 327.591 million shares from 330.921 million shares. The trading value dropped to Rs14.308 billion from Rs15.195 billion. Market capital expanded to Rs9.361 trillion against Rs9.327 trillion. Out of 356 companies active in the session, 203 closed in green, 125 in red and 28 remained unchanged.

Analyst Naveed Nadeem at Topline Securities said investors were optimistic ahead of Thursday’s general elections.

"This positive movement was fuelled by HUBC, MEBL, EFERT, UBL, and BAFL, collectively contributing 197 points to the index."

The highest increase was recorded in Hoechst Pakistan Limited, which rose by Rs76.34 to Rs1,400 per share, followed by Pakistan Services Limited, which increased by Rs41 to Rs920 per share. A significant decline was noted in Premium Textile Mills Limited, which fell by Rs19 to Rs361 per share, followed by Ismail Industries Limited, which closed lower by Rs13.48 to Rs1,261.52 per share.

Brokerage Arif Habib Ltd said the market gained, reclaiming the 64,000 poinst level, in the last trading session before the elections.

"The convergence of price action is expected to be resolved on Friday following the election results, with the market likely to react more positively to a stronger government," the brokerage said.

Mohammed Waqar Iqbal, an analyst at JS Research, said the market traded in a positive trajectory, albeit with lacklustre participation throughout the day. “We believe investors opted to remain at bay before general elections,” Iqbal said.

“Going forward, investors are recommended to adopt a cautious approach and avail buy on dips strategy in banks and E&P sectors.”

K-Electric Ltd. remained the volume leader with 44.379 million shares which closed higher by 11 paisas to Rs4.86 per share. Oil & Gas Dev. followed it with 24.951 million shares, which closed lower by Rs4.90 to Rs150.67 per share.

Other significant turnover stocks included Pak Elektron, Pak Refinery, Cnergyico PK, P.I.A.C. (A), TPL Properties, Pak Petroleum, WorldCall Telecom and Pak Int. Bulk.

In Future’s Market, 319 companies recorded trading, of which 211 increased, 106 decreased and 2 remained unchanged.