Stocks gain around 1,300 points over multiple triggers including Saudi package, oil dip

Published November 29, 2021
Stockbrokers watch share prices at the Pakistan Stock Exchange in Karachi. — AFP/File
Stockbrokers watch share prices at the Pakistan Stock Exchange in Karachi. — AFP/File

Pakistan Stock Exchange's (PSX) benchmark KSE-100 index gained more than 1,200 points in intraday trading to cross the 45,000-point mark on Monday, buoyed by the cabinet's approval to revive Saudi Arabia's $3 billion support package for Pakistan in safe deposits and $1.2bn worth of oil supplies on deferred payments.

The benchmark KSE-100 index was up by 1,297.86 points or 2.94 per cent by 3:12pm. It closed the day at 45,330.05 points, up by 1,215.89 or 2.76pc, from the previous day's close of 44,114.16 points.

Salman Naqvi, head of research at Aba Ali Habib Securities, told Dawn.com the expectation of receiving funding from the International Monetary Fund (IMF) after the staff-level agreement last week, impending Saudi deposits — expected to be received in one or two days — as well as a major dip in crude oil prices were positive triggers.

"It is expected that the reduction in prices of crude oil will continue, which will help us reduce our current account deficit as well as inflation and reduce the continuous pressure on rupee," he added.

Meanwhile, stockbroker Zafar Moti said foreign influx at attractive rates following Pakistan's demotion from the emerging market (EM) index to the frontier market (FM) index was behind today's surge.

"Foreign funds are shopping at low rates because of which the market is on the up with healthy volume after several weeks," he said.

"It is expected that stocks can now start a new [upward] rally after money from Saudi Arabia is received. After a long time, majority of the companies are in green which is boosting investor confidence."

The market had closed at 44,114.16 points last week. Bulls had overpowered the bears on Friday after four consecutive days of index declines on the Pakistan Stock Exchange.

On Saturday, the federal cabinet approved a pair of summaries related to the Saudi support package.

A summary drafted by the Finance Division noted that after the draft of the deposit agreement between the two countries was vetted and cleared by the Ministry of Law as well as as the Office of the Attorney General for Pakistan, it was sent to the prime minister.

The summary, a copy of which is available with Dawn.com, noted that the prime minister, "in view of the urgency to relieve the current pressures on the exchange rate," approved its placement before the cabinet. The summary stated that the one-year agreement would carry an annual profit rate of 4pc.

A separate summary drafted by the Ministry of Economic Affairs pertained to the oil facility amounting to $100 million per month for a year, which it said can also be extended by another year with mutual consent. It noted that the terms of financing include price of purchase by the Saudi Fund for Development (SFD) along with a margin of 3.80pc.

Later in the day, the cabinet ratified both summaries.

The revival of both the deposit as well as the oil facility were agreed during Prime Minister Imran Khan's visit to the kingdom in October.

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