Stocks surge on hopes for a coalition government
The KSE-100 index rose more than 900 points on Wednesday, continuing the winning run for the Pakistan Stock Exchange (PSX), as investors gained confidence in the possibility of forming a coalition government.
A mutual decision by political parties, who revealed intentions for a coalition administration during a news conference, was the catalyst for the trading session’s early, strong increase.
As a result, the KSE-100 index reached 62,432.25, its intraday high. The optimistic report regarding the 30% increase in car sales served to reinforce the good atmosphere.
The index reached its intra-day low at 61,635.61 as a result of slightly muted trade activity during lunchtime.
But the rupee’s strengthening versus the dollar helped to get the market back on course. The stock exchange stayed in a strong trend all day and closed over the 62,000 threshold.
“As investors assessed the coalition government decision, positive data on car sales that increased 30% YoY in January 2024, and MSCI’s inclusion of 22 firms in the frontier market and small-cap index, stocks showed sharp recovery,” stated Ahsan Mehanti, MD of Arif Habib Corp.
“The bullish close in the post-election rally at the PSX was triggered by strong earnings outlook and stable rupee.”
The benchmark KSE-100 index closed at 62,153.84, up 926.92 points, or 1.51%, from the previous close.
In their statement, Topline Securities expressed some relief over the day. Pakistani equities “initialized business on a positive note, continuing its recovery mood from Tuesday,” it stated.
“The buying momentum may be ascribed to the major political parties’ agreement and press conference announcement of the upcoming coalition setup regarding the formation of a new government.”
The development led to widespread buying that was observed throughout trade hours.
Thus, Pakistan Petroleum, Engro Corporation, Engro Fertilizers, Systems Limited, and Pakistan State Oil added 343 points, Topline noted. The exploration and production (E&P), fertiliser, tech, and oil marketing firms sectors contributed positively to the index.
In its analysis, Arif Habib Limited (AHL) observed that the index rebounded from Tuesday’s lows and that the recovery from the sub-60,000 level was still underway with strong gains.
It is anticipated that the Economic Coordination Committee (ECC) will take gas price revisions into account. According to the IMF’s most recent country assessment, the government must increase gas prices by February 15, 2024.
Hub Power announced 1HFY24 EPS of Rs24.95, up 44%, and 2QFY24 EPS of Rs11.78, up 15% YoY. Additionally, it issued a dividend of Rs4 per share (1HFY24 – Rs9), which was less than anticipated.
AHL continued, “The rally is already forming to test the supply zone, which is 63,000–64,000.
Bulls drove the KSE-100 index higher, according to JS Global analyst Mohammed Waqar Iqbal, as news flow on the political and economic fronts enhanced investor mood.
The expert continued, “We advise investors to take advantage of any downturn as a chance to purchase stocks in the cement, tech, and E&P sectors.”
Compared to Tuesday’s total of 435.5 million shares, the overall trading volume dropped to 303.9 million shares. Over the course of the day, shares worth Rs14.7 billion were traded.
342 firms’ shares were exchanged. Of these, 56 stocks closed down, 19 stayed the same, and 267 stocks closed higher.
With 33.4 million shares traded, K-Electric was the volume leader. The company gained Rs0.32 to close at Rs4.47. Next in line were Pakistan Petroleum, with 15.5 million shares, which closed at Rs107.37 after gaining Rs6.1, and Oil and Gas Development Company, with 32.2 million shares, which lost Rs2.17 to conclude at Rs122.01.
According to the NCCPL, shares valued at Rs92.8 million were net purchases made by foreign investors.
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