Stocks soar as political crisis deescalates

Stocks staged a massive comeback on Friday reacting to Supreme Court’s decision to restore the parliament, which also offset the immediate impact of an enormous hike in interest rate on Thursday, traders said.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 Shares Index closed higher by 657.75 points or 1.50 percent to 44,444.58 points after oscillating between 44,507.62 and 43,786.83 points during the intraday.

Zafar Moti, a former director of PSX, said policy rate hike, the largest in nearly 26 years, could have dealt a serious blow to the market but the apex court’s verdict cushioned it.

“Investors believe this decision will make the political crisis far less complex,” he said.

He said the capital market picked up momentum in the morning, while a humongous recovery of rupee, historically Rs3.5 per dollar in one day in the interbank, boosted sentiment.

“Same positivity is expected to continue in the next session in the market,” Moti said.

KSE-30 Shares Index also rose by 306.05 points or 1.83 percent to 17,014.13 points.

JS Research said commercial banks stayed in the limelight because of the rate hike announced by SBP in an emergency meeting.

“Going forward, we recommend investors to book profits on the higher side,” the brokerage said.

Traded shares increased by 86 million to 227.88 million from 141.01 million shares. The trading value rose to Rs6.785 billion from Rs4.980 billion. Turnover in the future contracts rose to 76.02 million shares 40.28 million shares.

Market capital expanded to Rs7.474 trillion from Rs7.380 trillion. Out of 325 companies active in the session, 235 closed up, 72 in down, while 18 maintained status quo.

Nabeel Haroon at Topline Securities attributed this positivity to the Supreme Court decision, which he said had put an end to the political crisis to a large extent.

Banking sector rallied after the policy rate hike, he said.

The highest increase was recorded in prices of Bata (Pak) shares, up Rs80 to Rs2,339.20 per share, followed by Indus Motor Co, up Rs39.61 to Rs1,349.72 per share.

A major decline was noted in shares of Sapphire Fiber, down Rs60.35 to Rs765.25/share, followed by Hinopak Motors, down Rs10.90 to Rs309.10 per share.

Arif Habib Ltd said the PSX witnessed a bullish momentum after the Supreme Court decision created clarity among investors.

Moreover, appreciation of rupee against the dollar was also a big relief to investors, the brokerage said.

The report said in the first trading hour banking, energy, and refinery sectors saw positive activity, while the steel sector took a hammering because of the central bank's hawkish monetary stance that would increase the cost of borrowing for industries.

In the last trading hour, buying activity was observed across the board.

Major contributions came from banks (+328.1 points), energy (+80.5 points), cement (+52.1 points), technology (+33.6 points), and fertiliser (+30.5 points).

MEBL, UBL, HBL, MCB, and LUCK cumulatively contributed 277 points to the index.

Telecard Limited led the volume chart with 19.72 million shares. It was followed by Ghani Global Holding that registered a trade of 17.71 million shares.

Stocks that recorded significant turnover included Treet Corp, Cnergyico PK, TPL Properties, WorldCall Telecom, Fauji Cement, First National Equities, K-Electric Ltd, and Pakistan Refinery.