Stocks rally on reassurance of no change in economic team

Stocks rallied on Tuesday on eleventh-hour buying in an oversold market with choice scrips registering higher trades, largely drawing sentimental strength from the government’s reassurance the country’s economic team was not in for a change, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 1.06 percent or 417.76 points to close at 39,714.46 points, while its KSE-30 index was up 1.10 percent or 198.31 points to end at 18,288.96 points.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said “The clarity over the financial team and word from Shabbar Zaidi that he is not resigning as chairman FBR (Federal Board of Revenue) came as a sigh of relief for investors”.

On Monday the market fell far lower than expected and entered the oversold zone, enticing fresh buying from institutions and some of the individuals, Ahmad said.

“Moreover, there has been a general perception that in the upcoming FATF (Financial Action Task Force) meeting Pakistan will get an extension and IMF (International Monetary Fund) might give some waiver because of the reforms taken by the government which slowed the economy,” he added.

Of 342 active scrips, 220 advanced, 109 retreated, and 13 were unchanged. Volumes stood at 161.527 million shares, as compared with the turnover of 180.766 million shares in the previous session.

Staeesh Balani, director research at Ismail Iqbal Securities, said, “The market remained volatile and moved in a wide range of almost 1,000 points during the day”. News flow with regards to IMF review dominated overall sentiment, Balani added.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Stocks showed recovery led by scrips across the board on strong valuations amid bull-run in global equities and surge in international crude oil prices”.

Investor speculations over the target of raising Rs150 billion from SOEs (state-owned entities) privatisation programme amid ongoing IMF-Pakistan performance review led to a bullish close in the earnings season rally, Mehanti added. A leading analyst said the market before the close recorded handsome recovery after government made efforts convincing IMF it was not possible to increase electricity tariff given the current state of economy and higher inflation rate.

“Furthermore, it appears that IMF might revisit its plans as the government is expected to offer constructive proposals to reduce the overall losses in the energy sector,” he added. Delay in gas and electricity tariff hike might help tame inflation rate and subsequently improve overall business activity in the country and boost trade and exports, the dealer said.

An analyst from Habib Metro-Financial Services said that the benchmark index remained uncertain during the session but the sudden bullish run at the 11th hour led the index to gain appreciably.

“We expect the ongoing uncertainty to stay in the near term, while we advise investors to actively participate by accumulating blue chips at lower prices,” he said.

The highest gainers of the day were Rafhan Maize, up Rs145 close at Rs6,700/share, and Pakistan Tobacco, up Rs107.71 to finish at Rs2270.11/share. Companies that booked highest losses were Sanofi-Aventis, down Rs39.55 to close at Rs630/share, and Atlas Honda Limited, down Rs19 to close at Rs380/share. Hascol Petrol recorded the highest volumes with 12.853 million traded shares, gaining Rs1.02 to end at Rs22.65/share. The lowest volumes were witnessed in PIAC, recording 4.719 million shares, whereas the scrip gained Rs0.38 to end at Rs5.57/share.