Stocks track rupee recovery amid IMF deal bets

Stock on Thursday gained strength from rupee claw-back against dollar amid renewed bets Pakistan would reach a staff-level agreement with IMF in the talks scheduled for next week, traders said.

The KSE-100 Shares Index The benchmark of Pakistan Stock Exchange gained 182.80 points to close at 41,736 points.

The turnover also improved to 235 million shares from 151 million shares in the last trading session.

On the other hand, traded value surged to Rs5.4 billion against Rs4.4 billion a day ago, whereas the market capitalisation was almost flat at Rs6.97 trillion compared to Rs.6.94 trillion in the previous session.

JS Research said bulls pulled the stocks to an intraday high of 41,995 level (up 441 points); however, sweeping profit-taking took its toll. “Going forward, we expect the market to remain volatile and recommend investors to avail any downside as an opportunity to buy in the Cement and Textile sectors,” the brokerage said.

Arif Habib Limited in a post-trade note said the market remained positive throughout the day due to strengthening of rupee against dollar and accumulation of value stocks.

It noted that pharmaceutical and Technology sectors came under the limelight due to reports of some tax relief in the upcoming budget.

The Main board activity gained momentum, while hefty volumes were observed in the third tier stocks, it added.

Sectors that contributed to the performance included E&Ps (+44.5 points), technology (+32.3 points), power (+29.9 points), pharmaceuticals (+29.2 points), and investment banks (+23.1 points). Stocks that added significantly to the volumes were TPLP, WTL, UNITY, HASCOL, and GGL.

Ahsan Mehanti, analyst at Arif Habib Corp, observed stocks closed bullish led by selected scripts on pre-budget speculations and NEC’s nod to 5 percent growth target for FY2023.

He pointed out that oil stocks outperformed on surging global crude oil prices; however, the banking sector remained under pressure on Moody’s negative outlook for five Pakistani banks.

Mehanti also attributed the bullish trend to Rs2.184 trillion national development outlay proposed for federal budget FY23.

Topline Securities said equities had a positive day amid reports of a likely IMF staff level agreement next week.

During the day, the benchmark index made an intraday high at 41,995 (+442 points of 1.06 percent) but profit-taking pared some early gains.

Tech, fertiliser, E&P and power sector’s stocks contributed positively, the brokerage said and added that SYS, DAWH, POL, and HUBC added 91 points, cumulatively.

On the flip side, MEBL, HBL, and BAHL lost 32 points to profit-taking together. TPLP was the volume leader of the day with 31.8 million traded shares.

The government is set to announce the annual budget for FY23 on June 10, 2022, which is expected to focus on fiscal consolidation and austerity measures.

There are plans to introduce new taxation measures of Rs400-450 billion in the budget.

The road towards fiscal consolidation has already started with recent economic measures as the government has reduced the subsidy on petroleum products, while complete removal is expected in near term.

Nepra and OGRA have also recommended an increase in electricity tariff and gas prices, respectively, which is likely to get approval.