KSE-100 rallies 1.23% as govt looks to reduce circular debt

The Pakistan Stock Exchange (PSX) saw a return of positive sentiment on Monday and the KSE-100 Index surged 1.23% as energy sector scrips led the rally.

Market’s expectation of a reduction in circular debt in the energy segment of Pakistan rejuvenated investors’ interest at the equity market.

By the end of the session, the KSE-100 Index was up 485.96 points or 1.23% at 40,155.16 level.

After one day of gain, KSE-100 ends week on negative note

Trading began with a jump and the market rose close to 700 points in the initial hours. The PSX saw partial erosion of the gains by midday but a late session buying spree made the index close over the 40,000-point mark.

Across-the-board buying was witnessed with index-heavy automobiles, banks, cement and oil sectors closing in the green.

The increase comes in contrast to the previous week, when the KSE-100 Index tanked 4%, dropping near the 39,000-point level. Last Tuesday, marred by political upheaval and a vulnerable economic situation, the PSX witnessed a bloodbath as the benchmark KSE-100 Index lost over 1,100 points.

“The market is reacting positively to the development that the government intends to reduce the gas sector circular debt by 70%,” said Samiullah Tariq, Head of Research at Pakistan Kuwait Investment Company Limited.

On Friday, Prime Minister Shehbaz Sharif directed the Petroleum and Finance Divisions to prepare a master plan to reduce circular debt of the gas sector by 70% from existing Rs1.6 trillion to Rs500 billion by December 28, 2022, sources close to the finance minister told Business Recorder.

The decision was taken at a meeting on gas sector circular debt presided over by the prime minister on December 19, 2022.

The prime minister stressed upon urgent completion of assigned tasks of the strategic roadmap.

After a detailed discussion on gas sector circular debt, it was decided that the Petroleum Division, in collaboration with the Sui Southern Gas Company (SSGC) and the Sui Northern Gas Company Limited (SNGPL), to present a roadmap on reduction of inefficiencies and installation of Town Border Station (TBS) meters with 60 days.

Mustafa Pasha, Chief Investment Officer (CIO) at Lakson Investment, said the energy chain drove market sentiment.

“In terms of news flow, there is not much as concerns remain over dollar inflows and current account. However, the E&P, Refinery, OMC sector are enjoying a sense of optimism as the market believes that the government would be able to take some concrete measures to resolve the gas sector circular debt issue,” he said.

“Moreover, we have seen a significant decline in the market already, thus value hunters are buying, driving a pullback, which is normal behaviour,” he said.

Volume on the all-share index rose to 146.9 million from 132.6 million on Friday. The value of shares traded increased to Rs5.13 billion from Rs4.59 billion recorded in the previous session.

Pakistan Petroleum was the volume leader with 11.1 million shares, followed by Oil and Gas Development Company with 7.7 million shares, and WorldCall Telecom with 6.8 million shares.

Shares of 329 companies were traded on Monday, of which 207 registered an increase, 108 recorded a fall, and 14 remained unchanged.