KSE-100 sees best day in 2022 as market ignores political noise

Pakistan's stocks staged a dramatic rally as oil prices fell in the international market, with the benchmark KSE-100 Index seeing its largest single-day increase, in terms of percentage, since December last year with a 1.88% surge on Thursday.

The benchmark index, which has been under pressure due to the Russia-Ukraine conflict and surging oil prices, settled with an 810.66-point increase, or 1.88%, to finish at 43,853.62.

This was also its largest increase – in percentage terms – in 2022 so far. On December 15 last year, the index rose 2.59%.

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The market opened on a positive note after oil prices dropped in the international market, pushing the benchmark index towards its intra-day high at 43,867.93. Positivity also stemmed from attractive valuations as investors opted to cherry-pick after the index had endured pressure at the start of the week. Rising political noise also seemed to have been put on the backburner.

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“The biggest one-day slump in global crude oil prices and possibility of decline in other global commodities prices acted as positive triggers,” said Capital Stake in its post-market note.

Sectors taking the benchmark index upwards included cement (220.03 points), banking (198.62 points) and technology and communication (127.57 points).

Volume on the all-share index increased significantly to 271.91 million from 183.71 million on Wednesday. The value of shares traded also improved to Rs7.5 billion from Rs6.07 billion recorded in the previous session.

Pak Elektron (R) was the volume leader with 35 million shares, followed by TPL Properties with 23.46 million shares, and WorldCall Telecom with 22.93 million shares.

Shares of 356 companies were traded on Thursday, of which 242 registered an increase, 95 recorded a fall, and 19 remained unchanged.

Market gains on retreat in oil prices

The return of positive sentiment comes after oil prices had plunged over 17% on Wednesday. However, as developments unfolded, oil prices rose in volatile trade following a sharp drop in the previous session as the market contemplated whether major producers would boost supply to help plug the gap in output from Russia due to sanctions for its invasion of Ukraine.

Brent crude futures were up $2.53, or 2.28%, at $113.67 a barrel at 0651 GMT on Thursday after trading in about a $5 range. The benchmark contract slumped 13% in the previous session in its biggest one-day drop in nearly two years.

Uncertainty over where and when supply will come from to replace crude from the world’s second-largest exporter Russia in a tight market has led to wide-ranging forecasts for oil prices between $100 and $200 a barrel.

Following the earlier decline in oil prices, equities around the globe showed a reversal of trajectory. Asian equities rallied following a strong bounce on Wall Street and a surge in Europe.

“The decline in oil prices is the major contributor behind the positive start of the KSE-100,” Sana Tawfik, vice-president of research and a senior analyst at Arif Habib Limited (AHL), told Business Recorder earlier in the day.

She said positive developments on the geopolitical front, including negotiation talks between Russia and Ukraine, have also led to the rally.

“Investor confidence on the domestic political end has also returned after Prime Minister Imran Khan's latest speech in Karachi,” she said.

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Further revision in prudential regulations of banks is also helping the banking sector. “Under the revised regulations, banks' exposure amount per party has increased. It will not have a direct impact but could bolster the banking sector exposure in equities,” she said.

“However, clarity on the both domestic and geopolitical front is needed to achieve a sustainable push,” added Tawfik.