KARACHI: The stock market staged partial recovery on Tuesday after the clouds of uncertainty over ‘to go or not to go’ to the International Monetary Fund (IMF) for a bailout package were set at rest.

The finance minister had announced on Monday evening that the government had decided to exercise the option of last resort. The stock market greeted this news of approaching IMF with relief as it led to clarity on major economic issues. The KSE-100 index opened positive and went up to intraday high by 1,129 points within the first half an hour of trading.

The rally then ran out of steam and the market moved sideways for most of the day. The index finally closed with a recovery of 606.55 points (1.6 per cent) at 38,504.84.

The day’s recovery was led mainly by the energy sector as rupee devaluation helped exploration and production stocks — adding 294 points — due to their revenues being dollar-indexed. According to Arif Habib Ltd, other sectors that contributed to the index rise included banks, higher by 209 points, fertiliser 145 points, power 51 points and textile 30 points.

Scrip-wise, major gainers were Oil and Gas Development Company, up 5pc, Pakistan Petroleum 4.49pc, Pakistan Oilfields 4.82pc, Engro Corporation 3.46pc and Fauji Fertiliser 3.15pc, adding 366 points.

Senior analysts were advising investors to hold their horses. “We expect market to remain dull in the near term due to investors’ concerns over imbalances and economic slowdown attributable to fiscal/monetary tightening,” stated Elixir Securities.

Similarly, AKD Securities in its note wrote: “Historically, a minor relief rally occurs at the Pakistan Stock Exchange in the 2-3 months’ run-up to an IMF program before paring gains as challenging conditions begin to bite.”

Published in Dawn, October 10th, 2018