- Analysts say IMF-Pakistan agreement a 'positive development' which has improved market sentiment
Bullish momentum was witnessed at the Pakistan Stock Exchange (PSX) on Thursday as the benchmark KSE-100 Index crossed the 57,000 level for the first time in history. Investors rejoiced after Pakistan and the International Monetary Fund (IMF) authorities reached a staff-level agreement on the first review for 9-month Stand-By Arrangement (SBA).
The market witnessed slight profit-taking at the start of the session, but a strong buying spree took it into the positive territory and the momentum continued throughout the session.
At close, the benchmark index settled at 57,397.02, up by 716.96 points or 1.26%.
“Equities closed on a positive note today on improved liquidity and investors’ sentiment following staff level agreement with IMF yesterday coupled with the decline in T-bills yields, approximately by 50bps. Market volume surged to the highest level since June’21,” brokerage house Ismail Iqbal Securities said in its post market report.
On Wednesday, the KSE-100 Index oscillated between red and green zones to settle at 56,680.07, slightly up by 14.14 or 0.02%.
Across-the-board buying was witnessed on Thursday, with the index-heavy sectors including automobile assemblers, chemical, oil and gas exploration companies, OMCs, refineries and pharmaceuticals trading in the green.
Sana Tawfik, an analyst at Arif Habib Limited (AHL), termed the IMF-Pakistan agreement a “positive development” which has improved the market sentiment.
“Overall the IMF has acknowledged Pakistan’s economic measures, i.e. the adoption of a proactive monetary policy and fiscal consolidation, sending a message that Pakistan’s economy is moving towards recovery,” she told Business Recorder.
In a major breakthrough, the IMF announced on Wednesday that its staff and Pakistani authorities have reached an agreement on the first review of the $3-billion, nine-month Stand-By Arrangement (SBA).
The staff-level agreement is subject to approval by the IMF Executive Board.
“The IMF team has reached a staff-level agreement (SLA) with the Pakistani authorities on the first review of their stabilisation program supported by the IMF’s $3 billion (SDR2,250 million) SBA,” the financial agency said in its press release.
“Upon approval around $700 million (SDR 528 million) will become available bringing total disbursements under the program to almost $1.9 billion,” it added.
However, selling was witnessed in the index-heavy banking sector, with commercial banks trading in the red after the interim federal cabinet, on the recommendation of the Federal Board of Revenue (FBR), approved imposing a 40% tax on windfall profits of banks, which they earned from foreign exchange transactions in 2021 and 2022.
“The impact has been toned down due to negativity in the commercial banks sector after the government decided to impose taxation on windfall profits,” Tawfik admitted.
The expert said that the positive sentiment would further bolster amid the materialization of commitments by multilateral and bilateral lenders, which is expected to improve the foreign exchange reserve position of the country.
“Moreover, the reduction in T-bills rate is also a positive for the bourse, as liquidy will now shift to the equity market,” added Tawfik.
Meanwhile, the Pakistani rupee finally ended its 17-session depreciation run against the US dollar, as it appreciated 0.26% in the inter-bank market on Thursday. As per the State Bank of Pakistan, the rupee settled at 287.38, an increase of Re0.76.
Volume on the all-share index jumped to 1,056.7 million from 661.6 million a session before.
The value of shares rose to Rs28.8 billion from Rs24.3 billion in the previous session.
WorldCall Telecom remained the volume leader with 386.3 million shares, followed by Cnergyico PK with 45.1 million shares and Pak Refinery with 39.5 million shares.
Shares of 374 companies were traded on Thursday, of which 235 registered an increase, 118 recorded a fall, while 21 remained unchanged.