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KARACHI: Extending its winning streak for the third consecutive session after suffering the biggest-ever single-day fall on Dec 27, bulls staged a spectacular rally on the first day of the new calendar year of 2024, again tossing the KSE-100 index above 64,000-point level on Monday.
Topline Securities Ltd Chief Executive Officer Muhammed Sohail told Dawn that the release of funds to Independent Power Producers (IPPs) by the government has triggered a rally on the first day of 2024. Moreover, the smooth rollover of December futures contracts also helped sentiments.
Trading began on a strong note on the backdrop of IPP news which helped energy stocks to remain in the limelight since the start of the trading as Oil and Gas Development Company (OGDC), Pakistan Petroleum Ltd (PPL), Pakistan State Oil (PSO), Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company (SSGC) all hit their limits up for the day.
In addition, banking sector stocks also joined the party as investors did some cherry-picking in them in anticipation of better-than-expected earnings with good dividends in the upcoming result seasons, which will start in a couple of weeks.
Resultantly, PPL, OGDC, System Ltd, Hub Power Company and United Bank contributed 692 points to the index rally.
Expectations of low inflation with a softer monetary stance fuels cherry-picking
The KSE-100 index closed at 64,661.78 points after gaining 2,210.74 points or 3.54 per cent from the preceding session.
It was the second biggest single-day rally as the benchmark KSE index witnessed the historic surge of 2,446 points on July 3, 2023 after a deal for the nine-month $3bn Stand-By Arrangement (SBA) reached with the International Monetary Fund (IMF) and an immediate inflow of $1.2bn averted a potential default threat scenario triggering inflows from friendly countries improving SBP’s forex exchange reserves to meet timely repayment obligations.
Ahsan Mehanti of Arif Habib Corporation told Dawn that expectations for a significant fall in interest rates and inflation, the release of $700m by the IMF board possible on Jan 11 under the SBA and support from bilateral agencies, continued fuelling the optimism.
Mr Mehanti expected the PSX was likely to maintain a bullish outlook on the above cited positive factors including inflow of investment under the SIFC initiatives.
“Improved external account position and forex reserves reaching $7.8bn in the second last week of December 2023 and timely general elections all boosted the investor confidence,” he added.
Institutional and individual investors were active with volumes at record highs.
The overall trading volume increased 5.85pc to 625.14 million shares. The traded value increased 10.11pc to Rs18.5bn on a day-on-day basis.
Stocks contributing significantly to the traded volume included K-Electric Ltd (76.43m shares), WorldCall Telecom Ltd (61.55m shares), Cenergico PK Ltd (54.94m shares), Bank of Panjab (32.26m shares) and Fauji Foods Ltd (28.21m shares).
Companies registering the biggest increases in their share prices in absolute terms were Unilever Pakistan Foods Ltd (Rs300), Hoechst Pakistan Ltd (Rs88.47), Mari Petroleum Company Ltd (Rs51.20), Sapphire Textile Mills Ltd (Rs67.92) and Colgate Palmolive (Rs46.44).
Companies registering the biggest decreases in their share prices in absolute terms were Blessed Textile Mills Ltd (Rs19.99), Bata Pakistan Ltd (Rs10.08), Service Industries Ltd (Rs8.41), Tandlianwala Sugar Mills Ltd (Rs5.7) and Hinopak Motors Ltd (Rs4.84).
Foreign investors, however, remained net sellers as they offloaded shares worth $0.50m.