Positive momentum continued at the Pakistan Stock Exchange (PSX), as the benchmark KSE-100 Index closed over 600 points up on Friday with investors hoping that the prior action plan to appease the International Monetary Fund (IMF) was now complete.
According to Finance Minister Ishaq Dar, Pakistan was also close to inking the staff-level agreement with the global lender.
At the end of the session, the benchmark index closed at 41,337, an increase of 666.12 points or 1.64%.
Across-the-board buying was witnessed among index-heavy sectors including, automobile assemblers, cement, chemical, commercial banks and oil and gas sector.
Market analysts attributed the development to the policy rate hike by the central bank Monetary Policy Committee (MPC) and some perceived clarity around IMF talks.
“The market has attained clarity pertaining to the resumption of the IMF programme, as prerequisites related to currency devaluation and interest rate hike were remaining,” said Sana Tawfik, an analyst at Arif Habib Limited (AHL), told Business Recorder.
“The government has loosened its administrative controls, while hiking policy rate as well, suggesting that resumption of the stalled programme is on the cards,” she added.
The State Bank of Pakistan’s MPC on Thursday raised the key interest rate by 300 basis points, taking it to 20% – the highest level since October 1996 – as it bids to control runaway inflation.
The analyst was also of the view that devaluation of the currency was necessary as the grey market was booming, amid an increase in rate gap in the inter-bank and open markets.
“Moreover, Ishaq Dar’s statement pertaining to the staff-level agreement has also improved market sentiments,” she added.
On Thursday, Federal Minister for Finance and Revenue Ishaq Dar said that Pakistan is expected to ink a staff-level agreement with the International Monetary Fund (IMF) soon.
“Our negotiations with IMF are about to conclude and we expect to sign Staff Level Agreement with IMF by next week. All economic indicators are slowly moving in the right direction,” Dar said.
A report from Capital Stake stated that continuing with the positive trend the PSX ended the last session of the week in green.
“Market trend was similar to previous session where indices traded in green all day long after a small dip in the beginning,” it added. “Volume increased from last close. Investors regained confidence in the market on hopes that the IMF and government would soon reach a positive outcome.”
On the economic front, foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by $556 million to $3.81 billion, data released on Thursday showed.
Moreover, rupee registered a significant gain of 2.38% or Rs6.63 against the US dollar on Friday to settle at 278.46.
Sectors driving the benchmark KSE-100 index north included oil and gas exploration (204.57 points), banking (93.28 points) and miscellaneous (77.86 points).
Volume on the all-share index rose to 194.8 million from 152 million on Thursday. The value of shares dropped to Rs7.8 billion from Rs8.2 billion recorded in the previous session.
BankIslami was the volume leader with 15.7 million shares followed by WorldCall Telecom with 15.5 million shares and Oil and Gas Development Company with 13.4 million shares.
Shares of 342 companies were traded on Friday, of which 221 registered an increase, 93 recorded a fall and 28 remained unchanged.