Stocks manage to stay afloat after UAE throws a lifeline

Stocks on Friday ended barely positive, taking an eleventh hour U-turn after languishing in the red zone most of the session, primarily on the back of an announcement that United Arab Emirates (UAE) has given a go-ahead to a financial assistance worth $3 billion for Pakistan, dealers said.

Analyst Ahsan Mehanti from Arif Habib Corporations said stocks ended flat amid higher trades on late session recovery after UAE announced it would soon deposit $3 billion in State Bank of Pakistan (SBP) to support Pakistan’s monetary imbalances and improve foreign exchange reserves.

“The government’s measures to reduce current account deficit, Islamic banks agreement over issue of Rs200 billion sukuk to resolve circular debt crisis, and investor expectations that an IMF (International Monetary Fund) bailout package was around the corner contributed to a positive close at the apex bourse,” Mehanti added. Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 0.04 percent or 14.52 points to close at 38,251.04 points. KSE-30 shares index lost 0.14 percent or 26.13 points to end at 18,058.74 points.

Of 332 active scrips, 143 moved up, 165 retreated, and 24 remained unchanged. The ready market volumes stood at 130.398 million shares, as compared with the turnover of 136.687 million shares in the previous session.

Salman Ahmad, director equity sales at Aba Ali Habib, said the perception about the economy has changed and now it could be hoped that there would soon be good news from the China.

“This would stop immediate bleeding at the domestic currency front, halting the rupee slide,” Ahmad said. However, he added that, as investigation against some political big wigs and other happenings might lead to a knee-jerk reaction, but apparently the outcome had already been discounted by the market. “After a small negative reaction, the market was expected to strengthen,” he said.

The stock market opened and remained negative till the close of first session, losing around 390 points. However, during the prayer/lunch break, media broke the news of the arrival of financial assistance from the UAE, which improved the sentiment a bit.

The market after falling as low as 37845 points, got support from the financial institutions and local mutual funds. Advances led the column and the index climbed to the session high of 38487 points. The financial assistance is expected to give Pakistan a breathing space, helping it boost its foreign exchange reserves and prop up its sagging economy.

In addition, the market also got some support after an increase in selected oil shares like Oil and Gas Development Company and Pakistan State Oil after crude oil posted a healthy recovery in global markets. The highest gainers were Pakistan Tobacco, up Rs106.39 to close at Rs2627.47/share, and Murree Brewery, up Rs29.01 to finish at Rs809.90/share.

Companies that booked highest losses were Sapphire Textile, down Rs49.89 to close at Rs1250.00/share, and Sheezan International down Rs21.25 to close at Rs460.00/share.

K-Electric Limited recorded the highest volumes with a turnover of 17.354 billion shares. The scrip gained Rs0.03 to close at Rs6.02/share. The lowest volumes were witnessed in Lotte Chemical, recording a turnover of 5.358 million shares, and losing Rs0.02 to end at Rs18.08/share.