Stocks rebound on improved CPI reading

In Business
April 03, 2024


Pakistan Stock Exchange (PSX) on Tuesday showed signs of recovery as investors took cue from the decline in inflation reading to 20.68% for March 2024, which could lead to an easing of monetary policy by the State Bank of Pakistan (SBP).

Earlier, trading began on a positive note but soon the KSE-100 index dropped and hit its intra-day low of 66,573.63 points, reflecting the loss suffered in the previous session. However, the market started rising gradually, driven by the robust performance of global stocks and increase in international crude oil prices.

Additionally, government discussions on the privatisation of struggling state-owned enterprises (SOEs) and rupee stability following a staff-level agreement (SLA) between Pakistan and the International Monetary Fund (IMF) also contributed to the bullish momentum.

Consequently, the index reached the intra-day high at 66,959.54 points, falling just short of the 67,000 mark. With some profit-taking at the peak where investors seemed cautious ahead of Eid holidays, the market closed with thin gains.

“Stocks showed recovery as investors weighed 20.68% CPI (Consumer Price Index) inflation for March 2024, which is likely to lead to the easing of SBP policy next month,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Surging global stocks and crude oil prices, government deliberations on privatisation of ailing SOEs and rupee stability after Pakistan-IMF SLA in the final review played the role of catalysts in bullish close at the PSX.”

At close, the benchmark KSE-100 index recorded an increase of 89.94 points, or 0.13%, and settled at 66,886.26.

Topline Securities, in its report, said Pakistan equities kicked off the day on a positive note as the KSE-100 index reached its intra-day high just below 67,000 at 66,960 (+163 points). However, at the day’s high, profit-taking initiated.

“This market behaviour can be attributed to investors’ stance to remain sidelined ahead of Eid holidays scheduled for next week and in the absence of any triggers, which may influence market direction,” it said.

The day’s positive contributors were Dawood Hercules Corporation, Systems Limited, Fauji Fertiliser, MCB Bank and Bank Alfalah, which added 202 points.

Negative contributors were Hub Power, Pakistan Petroleum, Engro Fertilisers, Pakistan Tobacco and Mari Petroleum, which lost 110 points, it added.

Arif Habib Limited (AHL), in its review, said that it was a “flat day with the market rallying from the low of 66,600 to just below 67,000”.

Some 41 stocks rose while 48 fell with Dawood Hercules (+5.42%), Systems Limited (+2.85%) and Fauji Fertiliser (+0.94%) being the largest contributors to the index gains, it said, adding that according to the World Bank the economic growth in Pakistan was expected to pick up from the current fiscal year but would remain below 3% for the next two years.

JS Global analyst Muhammad Shuja Qureshi said that a volatile session ended with gains of 90 points in the KSE-100 index at 66,886. “Going forward, investors are advised to accumulate value stocks on dips,” the analyst added.

Overall trading volumes increased to 239.6 million shares against Monday’s tally of 238.8 million. The value of shares traded during the day was Rs8.9 billion.

Shares of 342 companies were traded. Of these, 160 stocks closed higher, 153 dropped and 29 remained unchanged.

WorldCall Telecom was the volume leader with trading in 32.3 million shares, gaining Rs0.05 to close at Rs1.35. It was followed by PTCL with 27.1 million shares, losing Rs0.48 to close at Rs16.46 and Pakistan Reinsurance Company with 13.1 million shares, losing Rs0.48 to close at Rs15.46.

Foreign investors were net buyers of shares worth Rs117.4 million, according to the NCCPL.

Published in The Express Tribune, April 3rd, 2024.

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