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Friday March 29, 2024

Stocks spike 1.72 percent as pre-bailout rally enters third day

By Our Correspondent
July 04, 2019

Stocks on Wednesday grew stronger for third straight session, feeding off the upbeat vibes from an expected approval of a critical bailout from International Monetary Fund (IMF), desperately needed to support a recessive economy, especially the balance of payments, dealers said.

Topline Securities in its market report said the benchmark index jumped 1.72 percent, highest in the last 19 sessions.

“Investor optimism gained momentum on expected approval of $6.6 billion from IMF executive board and possible resolution of GIDC (Gas Infrastructure Development Cess) issue in the next few weeks,” the brokerage said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 1.72 percent or 589.44 points to close at 34,896.55 points, while the KSE-30 followed suit with a high of 2.11 percent or 341.75 points to end at 16,511.06 points.

Of 333 active scrips, 239 moved up, 81 retreated, and 13 remained unchanged. The ready market volumes stood at 130.429 million shares, compared to 91.162 million shares recorded in the previous session. Muhammad Faizan Munshey, head of foreign institutional sales at Next Capital said the market continued its upward momentum, taking inspiration from Tuesday’s close amid anticipation of the approval of bailout package from the IMF executive board.

“Cement stocks closed broadly higher on the back of an increase in cement prices by Rs50. The DG Khan Cement closed higher 4.99 percent while Lucky increased by 2.96 percent and Maple Leaf Cement went up by 5 percent,” Faizan added. An analyst from Ismail Iqbal Securities said, “Investors are hopeful that the three-year Extended Fund Facility will get the green signal from the IMF’s executive board as according to SBP governor, the government has fulfilled all prior conditions”.

“If the fund is approved, the IMF may release its first tranche of $500 million in the coming few days,” the analyst said and added that it would open doors for Pakistan to get credit lines from World Bank and Asian Development Bank of approximately three billion dollars.

A leading analyst said, “It appears the government has followed the prescription of the IMF agreeing on almost all the conditions simply by meeting prior conditions set for seeking the loan”.

“Efforts to widen tax net through amnesty scheme, disclosure of wealth, and end of Benami accounts and assets, are a part of those commitments,” the analyst said. He said other related measures included gas and electricity tariff hike, depreciation of rupee, allowing the market forces to determine the rate, tightening the monetary policy by increasing benchmark interest rate, and cutting expenditures, etc.

Another positive factor for the market has been a continuous appreciation in the value of rupee against the dollar, which also gave out signals that things are now moving towards some stabilisation, he said.

The highest gainers were Indus Motor Company, up Rs17.67 to close at Rs1208.47/share, and Al-Ghazi Tractors, up Rs14.50 to finish at Rs330.50/share.

Companies that booked highest losses were Bata Pakistan, down Rs39.35 to close at Rs1400.00/share, and Mehmood Textile, down Rs10.97 to close at Rs391.47/share. Lotte Chemical recorded the highest volumes with a turnover of 11.690 million shares. The scrip gained Rs0.91 to close at Rs17.18/share.

The lowest volumes were witnessed in Amreli Steels recording a turnover of 3.759 million shares, whereas the scrip gained Rs0.37 to end at Rs23.44/share.