From Zeeshan Mirza
KARACHI: The Pakistan Stock Exchange (PSX) extended its stellar run for a second day in a row mostly after the country’s major political parties negotiated their way out of a stalemate over ‘who forms the next government’, scoring 926.92 points or 1.51%, cutting post-poll loss to 1,990 points or 3.1%.
The benchmark KSE-100 Shares Index closed at 62,153.84 level, registering a total trading volume of 179.31 million shares, showcasing a market heavily tilted towards the upside.
Arif Habib Limited in a note said the market continued its climb from sub-60,000 levels, adding another 4.26% to Tuesday’s gains.
This surge brings the week-on-week performance to -1.38%. The rally was broad-based, with 83 stocks advancing and only 8 declining. The PPL, ENGRO, and EFERT were the top gainers, while OGDC, HUBC, and MEBL weighed down the index.
As per news reports, the rally comes amid anticipation of revised gas prices by the Economic Coordination Committee (ECC) today (Wednesday). Moreover, the International Monetary Fund (IMF) has also urged the government to raise gas tariffs by mid-February.
Notably, HUBC’s second-quarter earnings fell short of market consensus, with Dividend Per Share lower than anticipated. With this upward momentum, the index is strongly likely to test the 63,000-64,000 resistance zone.
Notably, 83 companies experienced gains, while only 8 reported losses. Additionally, 4 companies maintained their position, and 5 remained untreated. On Tuesday, former allies such as the Pakistan Muslim League-Nawaz (PML-N) and the Pakistan People’s Party (PPP) agreed to establish a coalition government, also giving an open invitation to the Pakistan Tehreek-e-Insaf (PTI) to become a part of the rapprochement process.
Meanwhile, Moody’s Investors Service has warned that the ride for a coalition government would be extremely bumpy in terms of unity and political strength, causing problems in achieving consensus for needed reforms.
Market players are of the view that despite the political breakthrough, the resulting administration could be highly unstable.
The political impasse ended after the PML-N-led Pakistan Democratic Alliance nominated former Prime Minister Shehbaz Sharif as Pakistan’s new parliamentary leader, meeting the PPP’s demands.
A day earlier, the market PSX’s flagship KSE-100 index plummeted below the crucial 60,000 level in the first 15 minutes after the opening bell amid the ongoing political uncertainty.
However, it staged an epic comeback as investors wantonly harvested the abundant oversold stocks in late buying, surging over 1,600 points from its intraday low and closing marginally higher.
The index surged by as much as 1,614 points or 2.7% from its intraday low, concluding at 61,226.93, marking a gain of 161.61 points or 0.26% from the prior session’s close.
Analysts pinned the fluctuations on the uncertainty over the formation of a new government, adding, that the KSE-100’s recent rebound after political uncertainty highlights the inherent agility of market players.
The PSX witnessed a vicious two-day sell-off that shoved the benchmark index below 60,000 following the February 8 general elections.
The stock market also received a boost as MSCI on Tuesday announced the inclusion of 22 Pakistani companies in its Frontier Market and Small Cap indexes, effective from February 29.
The global index provider added three Pakistani firms — Bank Al Habib Ltd, Interloop Ltd and Sui North Gas Pipelines Ltd — to its Frontier Market Index, which tracks the performance of equity markets in 28 countries.
Meanwhile, 19 Pakistani companies including PSX were added to the MSCI Frontier Market Small Cap Index, which covers about 14% of the free float-adjusted market capitalisation of the Frontier Market Index.
“After this review, Pakistan’s weight in the Index is expected to be around 3%,” the brokerage said. “Due to this adjustment, we anticipate some net flows, although the quantum will not be significant.” it added.
Analysts said the index inclusion is a positive development for Pakistan’s stock market, as it reflected the improved fundamentals and prospects of the local companies.
