- Profit-taking kicks in during the second half, index sees over half its intra-day gains erased
The KSE-100 ended with a 320-point gain on Friday, with much of its intra-day advance lost due to profit-taking after the benchmark index had registered an increase of over 1,000 points by the afternoon session.
In early-morning trading, the government’s decision to hike petroleum product rates improved sentiment as the benchmark index jumped up to an intra-day high of 43,552.40, up by 1,010.69 points or over 2%. However, profit-taking hit equities that had seen a positive run in the previous two days as well.
At close on Friday, the KSE-100 finished with an increase of 319.74 points, or 0.75%, to close at 42,861.45. On a weekly basis, the benchmark KSE-100 index lost 0.56%.
The rupee too, snapped its lengthy 16-session depreciation run on Friday, strengthening 1.13% against the US dollar to close at 199.76 in the inter-bank market.
The improvement comes after Finance Minister Miftah Ismail in a press conference on Thursday night announced an increase in petroleum products’ prices by Rs30 per litre with implementation from midnight.
He expressed hope that reaching an understanding on staff-level agreement with the IMF would now be easier as constructive discussions are being held with the Fund.
The minister acknowledged that the price hike would contribute to inflation, but said the government had no other choice.
He added that the decision was taken to reduce pressure on the rupee, improve sentiment at the stock market, and most importantly, bring balance to the economy.
Analysts were of the view that the latest development is an indication of the IMF programme revival and that the government has charted out an economic roadmap.
“This will bring much-needed clarity to the market, which is being reflected both in equities and in currencies,” Tahir Abbas, Head of Research at Arif Habib Limited, told Business Recorder.
Abbas said positivity would remain in the market, but warned that inflation would spike.
“The situation will be tough for the next 3-4 months, however,the measure was needed. Otherwise, the country could have defaulted, which would have been much worse,” he said.
Meanwhile, AKD Securities in its report said that a successful resolution of a political stand-off between the sitting government and PTI, moving closer to reviving the IMF programme after revision of fuel prices lifted the gloom in the market.
"The market, which had touched the low of 41,950 recently, has rallied by ~1,400 points. The multiples, however, are still depressed at 4.45x and any positive news-flow will help in re-rating the multiples,” it added.
Sectors driving the benchmark KSE-100 index upwards included oil and gas exploration (48.48 points), fertilizer (45.66 points) and chemical (40.23 pts).
Volume on the all-share index surged to 527.7 million from 347.1 million a day prior. The value of shares traded rose to Rs13.97 billion from Rs9.04 billion recorded in the previous session.
Cnergyico PK was the volume leader with 64 million shares, followed by Pakistan Refinery with 55.64 million shares, and WorldCall Telecom with 21.51 million shares.
Shares of 368 companies were traded on Friday, of which 223 registered an increase, 131 recorded a fall, and 14 remained unchanged.