Oil and gas sector drives PSX after dull session

Led by a buying spree in oil and gas sector stocks, the Pakistan Stock Exchange (PSX) witnessed a bullish trend in the final hours of the trading session on Monday with the benchmark KSE-100 Index gaining over 1%.

The KSE-100 remained range-bound in the first half of the session. However, a strong buying spree helped it hit an intra-day high of 64,090.88 in the final few minutes.

At close, the benchmark index settled at 63,939.41, up by 657.19 points or 1.04%.

Heavy buying was witnessed in oil and gas exploration companies, OMCs, refineries and power & distribution companies, with OGDC, PPL, SNGP and SSGC standing out.

Experts said the buying spree comes amid reports that the government has shared its “dividend plug-in back scheme” with the International Monetary Fund (IMF), which is a positive for the oil and gas sector.

The development is expected to solve the circular debt problem engulfing the country’s energy sector, said experts.

Business Recorder had earlier reported that the interim minister has prepared an innovative plan to reduce circular debt of energy sector, which has been shared with caretaker Finance Minister Dr Shamshad Akhtar.

According to the main features, the plan will be restricted to public sector companies only, budget neutral and zero leakage. “Total settlement of Rs1.268 trillion will be done.”

During the previous week, the bourse remained under severe selling pressure due to geopolitical tension between Pakistan and Iran. The benchmark KSE-100 index plunged by 1,355.41 points on a week-on-week basis and closed at 63,282.23.

Earlier, the IMF said timely adjustments in electricity tariff are critical to restore energy sector viability while maintaining a progressive structure to protect the most vulnerable households.

This was highlighted in the IMF document titled ‘First Review under Stand-By Arrangement (SBA), request for waiver on non-observance of a performance criterion, modification of performance criteria and for rephasing of access’ and reiterated the need for swift movement on broader reforms to reduce operational inefficiencies, improve performance, and reduce distortions that combine to continue to add pressure on Circular Debt flows.

Globally, most Asian markets rose Monday following a record finish on Wall Street, but hopes for an early US interest rate cut were dealt a fresh blow by Federal Reserve officials looking to rein in investor expectations.

A surge in tech titans including Apple, Amazon, Nvidia and Facebook parent Meta pushed the S&P 500 to its first new all-time high since early 2022 thanks to bets on lower borrowing costs this year.

The rally was helped by a closely watched survey from the University of Michigan showing a surge in consumer confidence and optimism about falling inflation. However, analysts warned that traders may have run a little ahead of themselves at the end of last year as they forecast the Fed will cut rates up to six times before December, with the first coming in March.

Meanwhile, the Pakistani rupee maintained its upward trajectory against the US dollar for the fourth successive session, appreciating 0.02% in the inter-bank market on Monday. As per the State Bank of Pakistan, the local unit closed at 279.85, a gain of Re0.05 against the greenback.

Volume on the all-share index increased to 298.7 million from 287.3 million a session before.

The value of shares rose to Rs12.5 billion from Rs9.3 billion in the previous session.

K-Electric Ltd was the volume leader with 97.7 million shares, followed by Pak Petroleum with 23.3 million shares, and P.I.A.C.(A) at 21.1 million shares.

Shares of 335 companies were traded on Monday, of which 140 registered an increase, 171 recorded a fall, while 24 remained unchanged.