Stocks surge nearly 3pc as investors snap up bargains after historic rout

Stocks rose nearly 3 percent on Wednesday, recovering from a historic sell-off in the previous session, as investors snapped up oversold shares in anticipation of positive economic news, analysts said.

The Pakistan Stock Exchange (PSX) benchmark KSE-100 index gained 1,692.64 points, or 2.86 percent to close at 60,863.62, after hitting a low of 58,758.48 earlier in the day. The index had plunged 4 percent on Tuesday, its biggest single-day drop, amid political uncertainty. The KSE-30 index also gained 553.82 points or 2.81 percent to close 20,278.71 points.

"Stocks showed sharp recovery ahead of year close on institutional buying in oversold scrips," said analyst Ahsan Mehanti at Arif Habib Corp. He said a surge in global crude oil prices, rupee stability and the imminent release of a $700 million tranche from the International Monetary Fund and $350 million from the World Bank next month played a catalytic role in the bullish close.

Traded shares decreased by one million shares to 669.356 million shares from 670.859 million shares. The trading value decreased to Rs16.115 billion from Rs17.129 billion. Market capital expanded to Rs8.816 trillion against Rs8.608 trillion. Out of 357 companies active in the session, 274 closed in green, 63 in red and 20 remained unchanged.

Analyst Ali Najib at Topline Securities said equities had a recovery day. "The day initially carried forward Tuesday’s bearish momentum and made an intraday low at 58,758 level, however, value hunters rescued the market at an intraday low level which ultimately led to across-the-board buying," Najib said

"Due to aforesaid buying, the day ended at 2.86 percent up, reflecting substantial recovery post Tuesday’s historic sell-off."

Resultantly, power, banks, tech, fertilizer and cement sectors received considerable buying interest where HUBC, MEBL, SYS, EFERT and LUCK positively contributed 481 points to the index.

The highest increase was recorded in Pakistan Tobacco Company Limited, which rose by Rs56 to Rs1,100 per share, followed by Mari Petroleum Company Limited, which increased by Rs43.55 to Rs1,993.26 per share. A significant decline was noted in Mehmood Textile Mills Limited, which fell by Rs37 to Rs468 per share, followed by Faisal Spinning Mills Limited, which closed lower by Rs29.25 to Rs360.75 per share.

Arif Habib Ltd, a brokerage, said the both the indices maintained their strength, holding firm at 60,000 and 20,000 points, respectively, with robust buying observed across the market. "These critical levels successfully withstood the pressure, marking the initial examination of the ongoing bull market. The resilience displayed at these benchmarks is significant for the market's overall stability," it added.

"The immediate task for the benchmark index is to reclaim and sustain the 61,000 level by the week's end. Achieving this would signal the establishment of a support base, redirecting attention towards the prospect of attaining new market highs."

In the remaining two trading sessions of the year, the primary objective is to ensure that large-cap stocks close above their November 30th levels, the brokerage said.

K-Electric Ltd. remained the volume leader with 102,249 million shares which closed higher by 45 paisas to Rs4.89 per share. Fauji Foods Ltd followed it with 58.130 million shares, which closed higher by 75 paisas to Rs11.25 per share.

Other significant turnover stocks included P.T.C.L. Cnergyico PK, WorldCall Telecom, B.O. Punjab, Pak Refinery, Kohinoor Spining, Pak Elektron and Hascol Petrol.

A total of 315 companies recorded future shares, of which 270 increased, 43 decreased and 2 remained unchanged.