Stocks rise as gas debt talk prompts energy sector rally

Stocks closed higher on Monday as the energy sector rallied on government talks with the International Monetary Fund (IMF) about settling the gas sector’s circular debt, traders said.

Pakistan Stock Exchange (PSX) benchmark KSE 100-share Index went up 1.79 percent or 722.47 points to close at 41,193.63 points against 40,471.16 points recorded in the last session. Intraday high was 41,295.31 points, while the lowest level of the day was recorded at 40,471.16 points.

Analyst Ahsan Mehanti at Arif Habib Corp said, “Stocks showed strong recovery in the earnings season rally at PSX on speculation over settling the gas sector circular debt plan upon IMF approval.”

He said strong rupee recovery and institutional interest ahead of the completion of the 9th IMF review played a catalytic role in the bullish activity. KSE-30 index also increased by 331.44 points or 2.19 percent to close at 15,494.02 points compared with 15,162.58 points recorded in the last session.

Volumes increase by 71 million shares to 176.726 million shares from 105.053 million shares, whereas value climbed up to Rs8.794 billion from Rs4.181 billion. Market capital expanded to Rs6.457 trillion from Rs6.352 trillion. Out of 332 companies active in the session, 198 closed in green, 107 in red and 27 remained unchanged.

Analyst Muhammad Arbash at Topline Securities said, “Market opened on a positive note where initial gains were led by OGDC, PPL, SNGPL and SSGC, as the government proposed gas-based circular debt plan to IMF.

The government plans to settle Rs540 billion through cash settlement supplementary grant and dividends, where SNGPL and SSGC will get the supplementary grants and both Sui’s will pay to OGDC and PPL,” he said.

The highest increase was recorded in the shares of Rafhan Maize, up Rs299 to close at Rs8,299/share, followed by Sapphire Tex, up Rs76.50 to close at Rs1,096.50/share. A significant decline was noted in the shares of Unilever Foods, down Rs353.93 to end at Rs23,646.07/share, followed by Nestle Pakistan, down Rs64.01 to end at Rs5,299.99/share.

Brokerage Arif Habib Ltd said the index enjoyed a positive start to the week. “After a depressing previous close, the market opened in the positive zone as bulls stormed the index and achieved an intraday high of 831.13 points after it was reported that the government would adhere to the terms of the International Monetary Fund,” it reported.

“The E&P sector remained in the spotlight following news that the government is considering settling the outstanding gas sector circular debt.” Across the board, volumes increased substantially.

Sectors contributing to the performance included E&Ps (+327.8 points), OMCs (+74 points), commercial banks (+68.9 points), technology and communication (+55.8 points), and cement (+54.7 points).

Pakistan Petroleum remained the volume leader with 21.833 million shares, which increased by Rs5.59 to close at Rs80.15/share. It was followed by SNGPL with 13.436 million shares that closed higher by Rs3.03 to end at Rs43.47/share.

Other stocks that recorded significant turnover included OGDC, K-Electric, SSGC, Cnergyico PK, WorldCall Telecom. PTCL, Hubco, and TRG Pak Ltd. Shares’ turnover in the future contracts increased to 47.995 million shares from 26.865 million shares.