KSE-100 gains 1.26% even as IMF programme remains stalled

The government’s inability to persuade the International Monetary Fund (IMF) to revive the stalled $6-billion Extended Fund Facility (EFF) failed to have a negative impact on the equity market as the KSE-100 index extended its gain on Thursday after a gain of 529 points.

Instead, the market took cue from the emergence of much-needed political clarity, on the back of Pakistan Tehreek-e-Insaf (PTI) calling off its long march, helping the index finish over the 42,500 level.

At close on Thursday, the KSE-100 reported an increase of 529.05 points, or 1.26%, to finish at 42,541.71.

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In terms of the programme, the IMF pointed out “deviations” on fiscal sides from the policies agreed in the last review. Resultantly, no staff level agreement was reached while the revival of $6 billion EFF was delayed. However, clarity emerged in the sense that fuel and power subsidies will need to be rolled back to get IMF approval for the release of $900 million.

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On Thursday, the session began on a mixed note as the KSE-100 index traded both ways. However, after the initial hour, the market began its ascent.

An analyst at Topline Securities stressed that the market already anticipated the IMF’s decision, as the government was reluctant to remove the subsidy on petroleum products, which was the global lender’s top condition for programme revival.

Earlier, the State Bank of Pakistan’s Monetary Policy Committee had also indicated of a delay in talks, the analyst pointed out.

“Meanwhile, market sentiment turned positive after the PTI decided to call off its long march, diminishing political noise,” said the analyst.

Saad Hashmey, Executive Director at BMA Capital, told Business Recorder that across-the-board buying was witnessed at the PSX, as investors purchased stocks at attractive valuations.

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“The IMF’s announcement should not be taken negatively as talks can take considerable time before reaching a conclusion,” said Hashmey, adding that the government remains involved with the Fund for budget preparation.

Meanwhile, Tellimer Research in its latest report said given Pakistan’s limited reserve buffers and large external financing needs, resumption of IMF’s programme is necessary to avoid a balance of payments crisis.

Sector driving the benchmark index upwards included technology and communication (156.52 points), cement (69.81 points) and banking (60.43 points).

Volume on the all-share index surged to 347.1 million from 240.1 million a day prior. The value of shares traded rose to Rs9.04 billion from Rs7.57 billion recorded in the previous session.

Pakistan Refinery was the volume leader with 35.66 million shares, followed by Cnergyico PK with 19.65 million shares, and Telecard Limited with 18.44 million shares.

Shares of 351 companies were traded on Thursday, of which 263 registered an increase, 63 recorded a fall, and 25 remained unchanged.