KARACHI: The stock market staged a spectacular new year rally on Friday. As investors stared in amazement, the KSE-100 index shot through the roof by 1,119 points.
Later in the day, it pulled back a little to close with gains of 679.42 points at 44,435—the highest level in 30 months, after June 2018.
The investor exuberance, almost all market participants said, was underpinned by anticipation of resolution of the menace of circular debt, which brought to life the entire energy chain.
As many as 39 shares hit their upper circuit, of which nine were from the power generation sector, including Hub Power and Kot Addu power companies. Details of the settlement were not available, but journalist Kamran Khan tweeted: “Solution to power sector crisis is round the corner. MOUs with independent power producers (IPPs) would turn in agreements very soon. The International Monetary Fund approval obtained. Final decisions to untangle the energy crisis were made in a meeting under PM Imran Khan attended by General Bajwa”.
Also, the research team at brokerage firm Aba Ali Habib Securities stated that as per their channel check, government and IPPs had reached an agreement over the payment terms of the outstanding circular debt.
“Sources reveal, repayment schedule has been devised to disburse a total amount of Rs450 billion in 2021 in three equal instalments in January, June and December”, said the analysts.
Other than that, the cement and steel sectors remained under pressure while the fertiliser sector contributed in smaller measure to the surge in index which was backed by an increase in Urea prices. Banking sector stocks saw some renewed buying.
Foreign investors watched from the side-lines while mutual funds were the major buyers of $5.47 million worth stocks while banks sold equities amounting to $4.17m.
Traded volumes increased 11 per cent over the previous day to 641.5m shares while the traded value also increased by 15pc to reach $170.5m. Stocks that contributed most points to the index upsurge included Hub Power, Pakistan Petroleum, Oil and Gas Development Company, Pakistan State Oil and United Bank Ltd.
Published in Dawn, January 2nd, 2021
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