Stocks hit another high amid positive indicators

KARACHI: Pakistan stocks closed to another all-time high Monday, as investors weighed data on the current account surplus and the visit of the Iranian president positively, traders said.

The Pakistan Stock Exchange’s (PSX) benchmark KSE 100-share Index increased by 523.56 points or 0.74 percent to 71,433.46 points against 70,909.90 points recorded in the last session. The highest index of the day remained at 71,861.18 points while the lowest level was recorded at 70,882.45 points.

Analyst Ahsan Mehanti at Arif Habib Corp said, “Stocks closed bullish in the earnings season rally at PSX amid strong financial results and speculation ahead of SBP policy announcement on April 29.”

Government deliberations on privatisation of SOEs, rupee stability amid foreign inflows and IMF new loan talks due next month played a catalyst role in a record close, he said. The KSE-30 index increased by 189.79 points or 0.81 percent to 23,566.36 points against 23,376.57 points.

Traded shares increased by 180 million shares to 655.205 million shares from 475.833 million shares. The trading value rose to Rs31.248 billion from Rs23.220 billion. Market capital expanded to Rs9.925 trillion against Rs9.833 trillion. Of 389 companies active in the session, 217 closed in green, 140 in red and 32 remained unchanged.

Naveed Nadeem, an analyst at Topline Securities, said Monday’s trading session in the stock market concluded with a notable milestone as the index surged to a record high of 71,433, marking a 0.74 percent increase or 524 points.

He said that driving sectors in the index’s upward movement included oil & gas exploration, banks, fertilizers and cement. MARI, UBL, EFERT, LUCK, and OGDC collectively contributed 351 points to the positive momentum. Conversely, HUBC, BAHL, and EPCL had a negative impact, collectively shedding 57 points.

The highest increase was recorded in Mari Petroleum Company Limited shares, which rose by Rs133.51 to Rs2,755.69 per share, followed by Ismail Industries Limited, which increased by Rs76.35 to Rs1,149.21 per share. A significant decline was noted in Unilever Pakistan Foods Limited, which fell by Rs366.66 to Rs20,533.34 per share, followed by Sapphire Fibres Limited, which closed lower by Rs69.90 to Rs1,350.10 per share.

Brokerage Arif Habib Ltd stated that the equity market continued its upward trajectory as the KSE-100 index crossed the 71k mark, reflecting another week of gains for investors.

The week’s news flow was dominated by the visit of Iranian President Ebrahim Raisi, which Prime Minister Shehbaz Sharif described as “very productive.” The leaders affirmed their commitment to strengthen bilateral relations and enhance trade volume, aiming to reach $10 billion.

Looking ahead, near-term support for the KSE-100 is anticipated to rise to 71,000 for the upcoming week, reflecting the market’s resilience and bullish sentiment.

Habib Bank remained the volume leader with 48.145 million shares which closed lower by 55 paisas to Rs114.53 per share. Pak Refinery followed it with 30.5 million shares, which closed lower by Rs1.39 to Rs28.70 per share.

Other significant turnover stocks included Pak Elektron, WorldCall Telecom, K-Electric Ltd, Bank of Punjab, PTCL, Fauji Cement, PIAC(A) and Fauji Foods Ltd.

Meanwhile, Pakistan posted in March its highest current account surplus since February 2015, providing some relief to the struggling country, which is seeking a new bailout from the International Monetary Fund to help manage its external financing needs and economic recovery, the central bank data showed on Monday.

In March, the surplus reached $619 million—its second positive reading in a row and the third largest monthly figure (surplus) on record.

The current account surplus increased by 15 percent in March, compared with the same month last year. March 2024 saw a 532 percent increase in the surplus over February’s $98 million amount.

The scale of the surplus highlights the jump in remittance inflows that Pakistani citizens working abroad sent home in the wake of the holy fasting month of Ramazan and Eid festival. Since October 2023, remittances have steadily increased due to regulatory measures and incentives to reroute such inflows through official channels. The exchange rate difference between the interbank and the grey market has now narrowed to 1-3 percent from more than 10 percent last year.

“Current account on the sequential basis primarily increased due to higher remittances, despite a slight deterioration in balance of trade and balance of services deficit and higher debt servicing,” said Awais Ashraf, director of research at Akseer Research.

Remittances to Pakistan increased to $3 billion in March, up 31 percent from a month ago. These inflows rose by 16 percent year-on-year in March. The nation’s total goods exports reached $2.519 billion in March, up four percent year-on-year. However, month over month, shipments decreased by one percent. At $4.449 billion, imports represented a seven percent increase over the same period last year and a two percent increase over the previous month.

The current account deficit narrowed by 87 percent to $508 million in the nine months (July-March) of the fiscal year 2024. In meetings with foreign investors last week on the sidelines of the IMF-World Bank Spring meetings in Washington, State Bank of Pakistan (SBP) Governor Jameel Ahmad stated that the country’s external sector has stabilised, as evidenced by the significant decline in the current account deficit.

Despite the repayment of a $1 billion Eurobond, the SBP managed to more than double its foreign reserves from January 2023 ($3.1 billion) to $8 billion on April 12, 2024, thanks to improvements in the external account.

The SBP’s forward liabilities have also drastically decreased, going from $5.7 billion in January 2023 to $3.4 billion in February.

Surprising commentators and markets alike, the forex reserves remained stable despite the repayment of dollar bonds. They surmised, therefore, that the SBP had purchased dollars from the market since remittance inflows had improved and outflows had decreased during the previous few weeks.

Pakistan has been able to build up its foreign exchange reserves in recent times, and by the end of June, it was expected to reach $10 billion, or almost two months’ worth of import cover.

Pakistan has to repay $24 billion in external debt in the next fiscal year. Muhammad Aurangzeb, the nation’s finance minister, has recently made important contacts while on his tour in the US, especially when it comes to talking about the new IMF loan programme. According to reports, Pakistan has formally asked the IMF for another bailout. The programme’s framework is expected to be completed by May 2024, and in mid-May, an IMF delegation is expected to visit the country.

To plan how to raise the country’s credit ratings and provide a path for economic growth, the minister also called meetings with rating agencies while he was abroad. Pakistan intends to access capital markets during the fiscal years 2025–2026, which is in line with this objective.