Stocks rebound from early plunge, bargain hunters defy circular debt worries

Stocks erased a steep loss and closed higher on Tuesday, as bargain hunters snapped up shares that were battered by concerns over the country’s circular debt plan, dealers said.

The Pakistan Stock Exchange's (PSX) benchmark KSE 100-share Index gained 161.61 points or 0.26 percent to close at 61,226.93 points after slumping as much as 2.4 percent earlier. The highest index of the day remained at 61,654.65 points while the lowest level was recorded at 59,613.18 points. The KSE-30 index increased by 47.58 points or 0.23 percent to close at 20,685.12 points.

“Stocks showed recovery in the post-election rally at PSX after MSCI added 19 companies in its MSCI frontier small cap index in its quarterly index review,” said analyst Ahsan Mehanti at Arif Habib Corp.

"Reports of coalition set-up, upbeat data on $2.4 billion remittances surging by 26 percent year-on-year in Janurary and strong earnings in the oil and banking sector played a catalytic role in a bullish close."

However, the market faced some pressure in the mid-session, as reports emerged that the International Monetary Fund was not satisfied with the government’s proposals for power tariff rationalization and resolution of the circular debt crisis.

Traded shares increased by 86 million shares to 435.549 million shares from 349.975 million shares. The trading value rose to Rs15.972 billion from Rs12.745 billion. Market capital narrowed to Rs8.920 trillion against Rs8.934 trillion. Out of 355 companies active in the session, 188 closed in green, 139 in red and 28 remained unchanged.

Analyst Maaz Mulla at Topline Securities said the the benchmark index swung in both directions as investors were not clear who will form a new government. Index made an intraday low of (-1,452.14) points and an intraday high of (+589.34) points to close at 61,226.92 level (up by 161.61 points).

The market opened on a negative trend where mainly OGDC and PPL opened at the lower lock on the back of the news that IMF is not on board with the energy ministry’s tariff rationalization and circular debt management plan. However, during the second half recovery was witnessed and both stocks managed to open their respective lower locks to close at OGDC (-7.47 percent) and PPL (-6.25 percent).

The cement sector witnessed a resurgence, with PIOC, MLCF, and FCCL registering gains of 3.19 percent, 3.09 percent, and 2.98 percent, respectively, culminating in a positive close.

The highest increase was recorded in Mari Petroleum Company Limited, which rose by Rs161.03 to Rs2,308.04 per share, followed by ZIL Limited, which increased by Rs21.23 to Rs304.33 per share. A significant decline was noted in Rafhan Maize Products Company Limited, which fell by Rs346.99 to Rs8,303.01 per share, followed by Khairpur Sugar Mills Limited, which closed lower by Rs32.29 to Rs398.25 per share.

Brokerage Arif Habib Ltd stated that early declines in the market extended the post-election decline to -7.14 percent, touching 59,600 points level, before staging a recovery to close above 61,000 points.

BAHL, ILP, and SNGP have been added to the MSCI FM Standard, increasing Pakistan's stock representation to 20 with a total weight of approximately 3.3 percent, the highest since the country's classification change to Frontier Market.

Furthermore, 19 stocks were added to the MSCI Frontier Small Cap Index, expanding Pakistan's representation to over 60 stocks. "Despite any rallies, caution should be exercised as they are viewed as counter-trend movements, with 59,000 points remaining the near-term liquidity draw," the brokerage said. "The market will continue to closely monitor political developments to gauge the formation of the government."

K-Electric Ltd. remained the volume leader with 65.824 million shares which closed lower by 6 paisas to Rs4.15 per share. WorldCall Telecom followed it with 30.099 million shares, which closed higher by 2 paisas to Rs1.23 per share.

Other significant turnover stocks included Pak Refinery, Pak Petroleum, Cnergyico PK, P.I.A.C.(A), Oil & Gas Dev., Fauji Foods Ltd, B.O. Punjab and P.T.C.L.

In Future’s Market, 328 companies recorded trading, of which 180 increased, 143 decreased and 5 remained unchanged.