Stocks surge 684 points tossing index to 17-month highArchive
KARACHI: Bulls continued to hold sway at the stock market on Friday as they tossed the KSE-100 index up by 683.98 points (1.61 per cent) with closing seen at 17-month high 43,207.05 points.
Including the eye-popping gains of 1,166 points delivered the previous day, the index has raced up by 1,849 points or 4.43pc, which represents the highest two-day increase since May 23, 2019.
From Aug 16, 2019 when the benchmark index had hit the pit at 28,765 points, the market has witnessed a spectacular rally that has carried it up by 50pc in fewer than five months.
The incumbent government may also draw some satisfaction in looking at the index storm past the 43,000 points level for the first time from 42,447 points where it stood on Aug 18, 2018.
Pakistan Stock Exchange Chairman Sulaiman Mehdi talking to Dawn put his weight behind the macroeconomic stability as the reason for the upsurge in share values. In particular, he mentioned the turnaround in the current account balance.
“The current account deficit stood at $19.9 billion in 2017-18. There is a sustained drop so that the deficit shrank to just $1.5bn in the four months of 2019-20,” he said. He pointed out that the country had posted a current account surplus of $99 million in October. The country’s ranking in the ease of doing business jumped 28 places to 108th in 2019.
PSX chairman said that all these factors had instilled faith in the minds of investors who were now beginning to view the future with optimism.
Seasoned market players noted that the yield on the 10-year Pakistan Investment Bonds had receded from 14pc to 11.25pc. The yield on the long-term government paper sank below the benchmark interest rate, for the first time in a decade, which led the country’s financial managers to cut the rate of return on National Savings Schemes (NSS).
Hopes ran high that the fast drop in the yield on fixed income securities — whether bonds, bank deposits or NSS — would bring funds into the equity market.
On Friday, the investors scrambled to deploy cash in under-valued scrips, which provided a breather to the usual lead gainers.
The market once again opened on a strong positive note and resumed the northward journey to touch intra-day high by 719 points.
There was no major negative news flow that could thwart the market exuberance. On the political front, the belligerent atmosphere in the country took a pause after some reconciliation between the government and the opposition following the consensus passage of Army, Air Force and Navy Amendment Bills.
Internationally, the war clouds hanging over the region due to US-Iran hostilities dissipated which provided the investors the much-needed comfort to move funds from gold and money market back to risky assets that may provide higher returns.
Sectors contributing to the bullish performance on Friday included banks gaining 196 points, exploration and production 195 points, power 87 points, fertiliser 63 points and textile down by 30 points.
Scrip-wise major mover for the day were Pakistan Petroleum Ltd, up 5.0pc, Hub Power Company 4.6pc, Oil and Gas Development Company 3.8pc, Engro Corporation 1.6pc, MCB Bank 1.6pc, Bank Al Falah Ltd 3.8pc and United Bank Ltd 1.2pc.
Published in Dawn, January 11th, 2020