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February 13, 2020

Stocks stage staggering recovery on hopes of IMF waivers


February 13, 2020

Stocks on Wednesday walked away with a whopping recovery on hopes that IMF may give some leeway on several counts including the contentious tax collection target to Pakistan, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 2.06 percent or 816.67 points to close at 40,531.13 points, while its KSE-30 index secured 2.21 percent or 403.97 points to end at 18,692.93 points.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said “The market recorded gains with healthy volumes, indicating there was more room for improvement”.

“It was mainly owing to a sentimental boost that followed reports that IMF (International Monetary Fund) might give a waiver on tax collection and accept the government’s suggestion to revise the target downward for FY20.”

Some contribution also came from global markets that were on the rise since Tuesday, following a slowdown in the coronavirus outbreak related deaths compared to preceding week, restoring investor interest in the Asian equities, which sent positive signals across the world, Salman added.

Of 362 active scrips, 262 moved upwards, 79 downwards, and 21 stayed as they were at the opening bell. Volumes improved to 180.327 million shares, compared to 161.527 million in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporation said, “Stocks showed record recovery led by scrips across the board in the earnings seasons rally amid bullish global equities and surging global oil prices”.

“Strong institutional interest remained in trading session on speculations ahead of major financial results due this week.” Government’s resolve to control inflation and circular debt crisis, FATF (Financial Action Task Force) review and expectations for release of IMF tranche amid revised lower targets led to a bullish close, Mehanti added. Sateesh Balani, director research at Ismail Iqbal Securities, said, “Pakistani equities rallied mainly due to expectations of positive outcome of ongoing IMF review”.

“The trading activity improved compared to previous day,” Balani said. He said key result announcements helped investor sentiment as Meezan Bank reported strong profitability growth, while Cherat Cement reported lower than expected loss for the previous quarter.

Shahab Farooq, director research at Next Capital, said “The market took a sigh of relief with the news that IMF was likely to further revise down the tax collection target, subsiding risks to the sustainability of the programme”.

Samiullah Tariq, director research at Arif Habib Limited, said, “The government's efforts to keep gas and electricity tariffs unchanged to comfort the common person spelled out well as it would help ease some inflationary pressures”.

Tariq said the market was buzzing with reports that owing to current economic situation, the IMF might give some cushion to the government by revising the revenue collection target and also a waiver regarding increasing power and gas prices to help arrest rising inflation rate, which bode well for the market persons.

Top gainers of the day were Bhanero Textile, up Rs54 close at Rs954/share, and Mari Petroleum, up Rs48.94 to finish at Rs1313.67/share. Major losers were Unilever Foods, down Rs468 to close at Rs7,332/share, and Colgate Palmolive, down Rs80 to close at Rs2,100/share.

Hascol Petrol was the volume leader with 16.243 million shares and it gained Rs0.77 end at Rs23.42/share. K-Electric Limited’s turnover was lowest with 4.964 million shares, whereas it gained Rs0.06 to end at Rs4.19/share.