KARACHI: The benchmark tra­cking the performance of top 100 shares listed on the Pakistan Stock Exchange (PSX) registered its highest single-day surge on Mon­day, thanks to the signing of a nine-month Stand-By Arrange­ment (SBA) of $3 billion with the Int­ernational Monetary Fund (IMF).

Positive indicators also appeared elsewhere as the consumer inflation recorded at 29.4pc in June, eased from the highest level of 38pc in May. The open market witnessed a noteworthy appreciation of rupee against dollar, though actual price of greenback could not be established due to acute shortage of rupee amid closure of banks.

Finalising the SBA on the day the medium-term IMF programme was set to expire without full disbursements brought a sigh of relief to investors, analysts said. It helped quell the talk of a sovereign default and debt restructuring, paving the way for an “abnormal rally” that triggered an hour-long halt in trading — a regulatory feature desig­ned to let market participants take stock of a developing situation.

As a result, the KSE-100 index added 2,446.32 points, or 5.9 per cent, from the previous close to hit 43,899 points, a 14-month high. In the last three trading sessions alone, the index has gone up 3,834 points or 9.5pc, Arif Habib Ltd said.

‘Abnormal rally’ forces hour-long halt in trading to allow investors to adapt to situation; expert cautions Tuesday’s session may see profit-booking

Speaking to Dawn, Ismail Iqbal Securities Ltd Head of Equity Research Fahad Rauf said the extraordinary rally in share prices witnessed during the first post-SBA trading session can best be described as a knee-jerk reaction from investors longing for positive news.

“Shares rose across the board regardless of their fundamentals. I expect the sentiments to remain largely positive going forward, but the outright exuberance will likely become rationalised,” he said.

A sustainable increase in the index level will depend on the government taking active measures to resolve deep-seated problems like low tax collection, bleeding state-owned enterprises and liquidity-constrained energy sector, he said.

“The SBA is a lifeline for economy in the short run. Addressing the longstanding structural issues will bring long-term, sustainable growth in the stock market,” Mr Rauf added.

According to Muhammad Shuja Qureshi of JS Global, Tuesday’s session may witness some profit-booking. He advised investors to wait for intra-day dips to accumulate value stocks.

The overall trading volume increased 62pc to 381 million shares, highest since Oct 6, 2022. The traded value went up 15pc to $30m on a day-on-day basis, highest since May 4.

Stocks contributing significantly to the traded volume included WorldCall Telecom Ltd (54.9m shares), K-Electric Ltd (30.5m shares), Cnergyico PK Ltd (22.4m shares), Telecard Ltd (12m shares) and Fauji Foods Ltd (11.5m shares).

Sectors contributing the most to the index performance were commercial banking (554.4 points), oil and gas exploration (300.4 points), fertiliser (276.4 points), cement (271.9 points) and technology and communication (251.3 points).

Companies registering the biggest increases in their share prices in absolute terms were Nestle Pakistan Ltd (Rs152.50), Colgate-Palmolive Pakistan Ltd (Rs76.90), Sapphire Fibres Ltd (Rs76.62), Mari Petroleum Company Ltd (Rs66.52) and Sanofi-Aventis Pakistan Ltd (Rs51.86).

Companies that recorded the biggest declines in their share prices in absolute terms were Pakistan Engineering Company Ltd (Rs24.34), ZIL Ltd (Rs22.50), Pakistan Services Ltd (Rs5), EFU Life Assurance Ltd (Rs4.56) and Pakistan International Container Terminal Ltd (Rs4.28).

Published in Dawn, July 4th, 2023