Shares jump over 1,000 points on exchange rate cap removal, IMF revival hopes

Published January 26, 2023
A snapshot of trading activity at the Pakistan Stock Exchange on Thursday. — Photo via PSX website
A snapshot of trading activity at the Pakistan Stock Exchange on Thursday. — Photo via PSX website

Shares at the Pakistan Stock Exchange (PSX) continued to rally on Thursday, with the benchmark index crossing the key 40,000 points mark.

The KSE-100 index jumped 1,061.63 points, or 2.67 per cent, to close at 40,846.53 points. It reached an intraday high of 1,209.79 points, or 3.04pc, around 3pm.

“Stocks showed strong recovery in the earnings season on institutional interest in scrips across the board after the government’s decision to make tough decisions to seek IMF (International Monetary Fund) programme revival,” said Arif Habib Corporation’s Ahsan Mehanti.

He added that investor speculation over likely help from the United States to revive the programme as well as financial support from the United Arab Emirates and Saudi Arabia played a catalyst role in the bullish activity.

Dalal Securities CEO Siddique Dalal said it was evident the government had begun implementing the IMF’s conditions for the revival of the loan programme. He was referring to the steep depreciation of the rupee in the interbank and open markets today after an unofficial cap of the USD-PKR exchange rate was removed.

“Taxes will be imposed [through a mini-budget] and inflation will rise … but the IMF programme revival will unlock inflows from other multilateral lenders,” Dalal said, adding that the oil and banking sectors drove the rally.

“The KSE-100 has continued its upward momentum, pulled higher by refineries on news that the refinery policy has been finalised. Value buying is also being seen in the banking and cement sectors,” said Intermarket Securities’ Head of Equity Raza Jafri.

First National Equities Limited Director Amir Shehzad also shared Jafri’s view, saying the market rose on expectations that the finalised refinery policy would be approved.

He further said the cement and steel sectors rallied on expectations of a large increase in the development allocation in the upcoming mini-budget. “It is assumed that political uncertainty will be controlled due to which the market rose,” he added.

The KSE-100 index had shed nearly 2,000 points in the previous week on political instability after Punjab and Khyber Pakhtunkhwa assemblies were dissolved. However, bulls regained control this week on a lower-than-expected increase in the interest rate and expectations that the International Monetary Fund (IMF) programme would be resumed soon.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Under siege
Updated 03 May, 2024

Under siege

Whether through direct censorship, withholding advertising, harassment or violence, the press in Pakistan navigates a hazardous terrain.
Meddlesome ways
03 May, 2024

Meddlesome ways

AFTER this week’s proceedings in the so-called ‘meddling case’, it appears that the majority of judges...
Mass transit mess
03 May, 2024

Mass transit mess

THAT Karachi — one of the world’s largest megacities — does not have a mass transit system worth the name is ...
Punishing evaders
02 May, 2024

Punishing evaders

THE FBR’s decision to block mobile phone connections of more than half a million individuals who did not file...
Engaging Riyadh
Updated 02 May, 2024

Engaging Riyadh

It must be stressed that to pull in maximum foreign investment, a climate of domestic political stability is crucial.
Freedom to question
02 May, 2024

Freedom to question

WITH frequently suspended freedoms, increasing violence and few to speak out for the oppressed, it is unlikely that...