Stocks soar over 3.5 per cent

KARACHI: Stocks surged over 3.5 percent in a broad rally on Wednesday, capping off their best day in seven months, as optimism about a government-backed market support fund countered downbeat economic data and tumbling rupee.

Head of Research Faisal Shaji at Standard Capital Securities said short covering and news of probable backing by the finance adviser Hafeez Shaikh to the strategic fund propelled the market surge. “Slight positive news on economy such as improvement in current account deficit and attractive valuations induced investors to pounce on opportunities,” he added.

Pakistan Stock Exchange benchmark KSE-100 shares index gained 3.57 percent or 1,195.04 points to close at the 34,637.14 points level. It was the biggest percentage change after seven months or 145 sessions, according to brokerage Topline Research. KSE-30 shares index followed suit with a high of 3.97 percent or 631.19 points to end at 16,512.21 points level.

The trading volume remained impressive with 203.498 shares traded compared to 153.527 million shares traded a day earlier. Of 360 active shares, 303 moved up, 50 retreated, and seven remained unchanged. The ready market volume stood at 203.498 million shares compared with the turnover of 153.527 million shares in the previous session.

Analysts said the market recorded handsome gain of more than 1,000 points after a long gap with the stage set for more recovery on rupee stability and an expected market support fund, for which all the spadework has been done.

Senior financial analyst Khurram Schehzad said the market rebounded sharply on the back of an upcoming Rs20 billion market support fund and some clarity on interest rate and devaluation.

Schehzad said the market appeared to be undervalued and appealing to those “who can hold”. “Drop in markets weed out the weak-hearted and the people who stay have the highest rewards,” he said.

Shaji added that some 117 companies closed at the upper caps and thus some confidence restored “for the time being”.

Madiha Javed, head of Research at Ismail Iqbal Securities said the KSE-100 index opened on a positive note and remained bullish throughout the session. “Positive sentiments in the market were due to expectation of a support fund launching soon and decline in inter-market exchange rate.”

Salman Ahmad, head of institutional sales at Aba Ali Habib agreed that the market bounced back on formation of the funds as promised by the finance adviser on finance and valuations with price-to-earnings ratio at history low.

“Some sanity prevailed in the forex market,” Habib said. “Stability of the rupee versus dollar has been a concern. If the value stays stable rather shows some improvement the market is likely to stage some more recovery in coming sessions.”

Exploration and production, banks and fertiliser sectors were major contributors to the index gains, cumulatively contributing 724.72 points.