- Drop in oil prices, expected inflows from the UAE and IMF lift sentiment
The Pakistan Stock Exchange (PSX) sustained its upward momentum for a fifth straight session on Wednesday as the KSE-100 index rose 0.95% on the back of macroeconomic stability and drop in global oil prices.
International oil prices fell during the day on expectations that Druzhba pipeline flows will resume shortly. Brent crude futures were down $1.69, or 1.75%, to $94.62 a barrel at 1124 GMT while the US West Texas Intermediate crude futures were down $1.61, or 1.78%, at $88.89.
This development fuelled investor sentiment and the KSE-100 index closed the session with an increase of 398.61 points or 0.95% at 42,494.85 points. However, the index did close with trimmed gains after it had at one point gone as high as 42,776.47.
Trading began on a positive note and the market rose sharply in early hours to gain over 600 points in intra-day trading.
The KSE-100 index erased few of the gains towards noon and from this point onward, it remained range-bound until the final hours.
Heavyweight sectors including automobile, fertiliser, oil and bank closed with gains, however, cement and chemical spaces closed mixed.
Speaking to Business Recorder, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said the spike in equity market was primarily driven by macroeconomic stability in the country.
“The pressure on balance of payments has alleviated following contraction in imports which is bolstering the market,” he said. “Moreover, stability in rupee-dollar parity is acting as a positive sign for the market.”
Moreover, imports of the country shrank 37.7% on a month-on-month basis in July 2022 as they clocked in at $4.913 billion compared to $7.880 billion in June 2022.
“Completion of all prior conditions for resumption of the International Monetary Fund (IMF) programme is also adding upside pressure to the market,” Tariq said.
Meanwhile, Topline Securities analyst Umair Naseer tweeted “KSE-100 Index up 600 points. Expected decline in current account deficit, strengthening of rupee and improvement in Euro bond yields are the driving factors.”
A report from Topline Securities stated the positivity in stock market could be attributed to further decline in crude oil prices which will ease pressure on external account due to lower import bill going forward.
On the economic front, the Pakistani rupee continued to appreciate against the US dollar amid improved sentiment and closing at 221.91 in the inter-bank market.
Meanwhile, sectors that helped the benchmark KSE-100 index move up included banks (+156.4 points), exploration and production (+108.0 points), fertiliser (+56.1 points), power (+55.0 points) and technology (+42.7 points).
Volume on the all-share index fell to 373.2 million from 406.7 million on Friday. However, the value of shares traded improved to Rs13.2 billion from Rs11.6 billion recorded in the previous session.
Cnergyico PK was the volume leader with 33.7 million shares, followed by Pak Refinery with 27.7 million shares, and TPL Properties with 24.2 million shares.
Shares of 350 companies were traded on Wednesday, of which 203 registered an increase, 123 recorded a fall, and 24 remained unchanged.