Energy sector leads rally as shares gain over 700 points
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Shares at the Pakistan Stock Exchange (PSX) jumped on Monday, with the benchmark KSE-100 index closing at 41,190.77 points, up 719.61 points, or 1.78 per cent.
It reached an intraday high of 813.31 points, or 2.05pc, around 3:26pm.
Intermarket Securities’ Head of Equity Raza Jafri said state-owned Oil and Gas Development Company Limited (OGDCL) and Pakistan Petroleum Limited (PPL) led the rally on hopes that circular debt resolution may entail one-off bumper dividends being paid out.
“This also led to buying interest in other stocks in the energy chain. The IMF’s (International Monetary Fund) stance on this plan is unclear, but animal spirits are prevailing for now,” he commented.
Salman Naqvi, head of research at Aba Ali Habib Securities, also shared a similar view. He said reports of the government using a specific IMF-approved formula to resolve the circular debt issue, and expectations of exploration and production companies, including OGDCL, PPL and Sui Southern Gas Company (SSGC), giving good dividends as a result, were behind the index’s rise.
The weighted average of these companies in the benchmark index was high due to which the stock market rose, he said, adding that other sectors were also stabilising a bit on expectations of an agreement with the IMF.
However, the volumes were very low, Naqvi noted.
Share prices of PPL were up Rs5.59 or 7.5pc, OGDC up Rs6.44 or 7.49pc and Sui Northern Gas Pipelines Limited (SNGPL) up Rs3.03 or 7.49pc.
An IMF delegation arrived in Islamabad on Jan 13 for discussions on the ninth review of a $7 billion loan programme. On completion of the ninth review, the international lender would release $1.18bn that Pakistan needs to stave off default.
One of the IMF’s conditions has been the resolution of the gas sector’s circular debt. During technical discussions last week, Finance Minister Ishaq Dar had informed the IMF delegation that reforms were being introduced in the power sector and a high-level committee had been formed for devising modalities to offset the menace of circular debt in the gas sector.
