Stocks continue to climb as investors pin hopes on IMF bailout

KARACHI: Stock closed up 0.9 percent on strong valuations in auto, cement, and E&P sectors and slowdown in currency devaluation amid heightened expectations that the likely $9 billion IMF bailout package will trigger macroeconomic rebalancing, dealers said.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Bullish activity was witnessed at the PSX led by auto, fertilisers and cement scrips on strong valuations.” Moody’s termed the IMF programme as credit positive for Pakistan, which would aid macroeconomic rebalancing, structural reforms agenda and narrowing current account deficit to 4.6 percent of GDP by FY19.

“Government decision to opt for the IMF bailout package to meet external account crises and upbeat data on cement sales surging by 18.9 percent in September 2018 played a catalytic role in the bullish close,” he added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 0.89 percent or 334.91 points to close at 37,982.25 points level. KSE-30 shares index followed suit with a rise of 0.77 percent or 139.17 points to end at 18,297.55 points level.

As many as 374 scrips were astir today, of which 275 moved up, 89 retreated, and 10 remained unchanged. The ready market volumes stood at 223.400 billion shares as compared with the turnover of 194.167 billion in the previous session.

Zubair Jatoi from Aba Ali Habib Securities said volumes returned to the bourses after the government assured investors to take aggressive measures to support the exporting sector, curtail inflationary pressure, and increase the ease of doing business in the country. On the economic front, the government informed the press that it was seeking financial support from friendly nations along with the IMF option to ease the twin deficit pressure.

The market was up on expectation that the country would get $9 billion package from the IMF, for which Pakistan has to fulfil some harsh conditions. However, rise in interest rate would dampen the mood as it would increase the cost of doing business, an analyst said.

Auto sector has been in the lime light following decision by Indus Motor to increase car prices following devaluation, which boosted sentiments and triggered fresh buying. Oil and exploration shares also recorded increase on crude oil price appreciation. It was also expected that the government might increase prices of petroleum products, which would help improve the margins.

The highest gainers were Colgate Palmolive, up Rs99.99 to close at Rs2,499.99/share, and Indus Motor Company, up Rs55.51 to finish at Rs1,165.75/share. Companies that booked highest losses were Rafhan Maize, down Rs99.00 to close at Rs7,200.00/share, and Otsuka Pakistan, down Rs13.30 to close at Rs252.75/share.

Lotte Chemical recorded the highest volumes with a turnover of 24.808 million shares. The scrip gained Re1 to close at Rs15.22/share. The lowest volumes were witnessed in Bank Of Punjab, recording a turnover of 6.826 million shares. The scrip lost Rs0.3 to close at Rs10.85/share.