IMF nod bets keep stocks afloat

Stocks on Friday came off the flatline on reports Shehbaz government has consented to the IMF terms tied to the resumption of its suspended funding facility, raising hopes of an economic recovery, traders said.

The benchmark KSE-100 Shares Index ended the day with a gain of 117.26 point or 0.27 percent to close at 43,100.71 points, after moving in the band of 247 points, hitting an intraday high of 43,185.80 and a low of 42,938.60 points.

Pakistan is inching towards an imminent economic breakdown as the fiscal deficit is ballooning, thereby pushing the government’s domestic borrowing costs up to an all-time high, amid fast-eroding foreign exchange reserves.

The inflation is also running in double-digits amid liberal energy subsidies.

If the government succeeds in striking a deal with the IMF, the country’s chance of securing dollar inflows will increase manifold, breaking the steep fall of foreign exchange reserves.

Darson Research in a post-trade note said the local equity bourse witnessed a range-bound session and the benchmark index easily managed to close on an optimistic note in a choppy session where individual stocks repeatedly oscillated between the positive and negative zones.

Moreover, cautious investors are reluctant to take new positions owing to upcoming monetary policy, ongoing meeting with IMF, political uncertainty, continuous rupee depreciation versus dollar, and deteriorating foreign exchange reserve, the brokerage said.

Of the total active names 179 ended higher, 107 lower, and 35 did not change. KEL, SILK, PAEL, PRL and WTL were the major volume-makers of the day.

Topline Securities in its daily market report said political clarity added to the positive sentiment, while the government’s resolve to take tough decisions to save the economy from running aground also came as an underpinning.

After a sideways opening the market made an intraday high of 435 points pushed by LUCK, HUBC, TRG, FFC and EFERT, the brokerage said.

Traded volume and value for the day stood at 278.6mn shares and Rs6.9bn, respectively. WTL ruled the volume charts with ~27.07 million shares exchanging hands.

Commercial banks added 39 points, other financial institutions 16 points, oil & gas exploration sector 14 points, cement 10 points, and oil & gas marketing companies pitched in 10 points to strengthen the index.

AKD Research said the market was expected to remain choppy, especially in the wake of record currency depreciation.

“Apart from the macroeconomic risks, the investors should also closely track developments on the political front,” the brokerage said.

It said valuations were likely to squeeze further as SBP was expected to raise interest rates by up-to 150bps in the coming monetary policy statement.

“We therefore advise investors to remain cash rich and build positions once the interest rate hike and decision regarding subsidy reversal are in the bag,” the AKD Research report said.

JS Research said the market traded in range starting at negative 44 points before closing in at 117 points positive. Investors remained cautious hoping for a political outcome, which would bring clarity towards the direction of the index.

Going forward, the outlook for the market remains dull where investors should opt for a cautious approach keeping an eye out for events such as the roll over week, monetary policy announcement, talks with the IMF and any further political developments, the brokerage added.