KSE-100 stages dramatic recovery after falling below 60k

The Pakistan Stock Exchange (PSX) staged a dramatic turnaround after plunging over 1,450 points in the opening few minutes of trading on Tuesday after it was learnt that the International Monetary Fund (IMF) was not onboard with the government’s circular debt plan.

After falling below the 60,000 level during the opening hours of trading to hit an intra-day low of 59,613.17 – a fall of over 1,450 points - the KSE-100 began its recovery.

At close, the benchmark index settled at 61,226.93, an increase of 161.61 points or 0.26%.

Index-heavy energy stocks including OGDC, PPL, PSO and SNGP, however, were still in the red.

The earlier negativity came after the IMF said the interim government’s tariff rationalisation and circular debt management plans do not address the underlying problems of Pakistan’s energy sector.

“Restoring the viability of the energy sector is critical to Pakistan’s economic recovery and fiscal sustainability,” IMF Mission Chief Nathan Porter told Business Recorder via message on Monday.

“For this, it is essential for the government to focus on broad-based reforms, including to reduce the high cost of energy, improve compliance and reduce theft and line losses, end captive power, and fix the governance and management of the DISCOs, as well as keep up with regular tariff adjustments.

“In our view, the proposed plan does not address the underlying problems. In particular, the circular debt neutrality of the tariff rationalisation plan is doubtful and it would place a significant additional burden on vulnerable households.”

“Market was expecting a big dividend due to this,” said Mohammed Sohail, CEO of Topline Securities, in a note.

Experts said the market’s downward trajectory was led by OGDC and PPL in addition to political uncertainty that dampened sentiment as formation of a coalition government was seemingly still away from being finalised.

After its recovery, an analyst said strong corporate showing is driving the index upwards.

“Although there is no positive development on the economic front, strong corporate results are acting as a support factor,” Sana Tawfik, an analyst at AHL, told Business Recorder.

On the corporate front, Allied Bank Limited posted a profit growth of nearly 95% during 2023, as compared to the preceding year.

Meanwhile, others were of the view that the recovery comes over market expectations of the formation of a coalition government soon.

“The recovery comes amid hope that soon a coalition government will take charge, and things will be smooth,” Sohail told Business Recorder later during trading.

On Monday, the wider market had shrugged off a post on Sunday evening by the Petroleum Division, Ministry of Energy with index-heavy OGDC and PPL deep in the red, dragging the KSE-100 with selling pressure also due to political uncertainty after the General Elections.

At close, the KSE-100 settled at 61,065.31, down 1,878.43 points or 2.98%. This was the lowest closing of the benchmark index since December 27, 2023.

Meanwhile, on Tuesday, the rupee registered a marginal increase of 0.01% against the US dollar in the inter-bank market. At close, the local unit settled at 279.31 after a gain of Re0.02 against the greenback, as per the State Bank of Pakistan.

Volume on the all-share index increased to 435.5 million from 350 million a session ago.

The value of shares rose to Rs15.97 billion from Rs12.74 billion in the previous session.

K-Electric Ltd was the volume leader with 65.8 million shares, followed by WorldCall Telecom with 30.1 million shares, and Pak Refinery with 28.6 million shares.

Shares of 355 companies were traded on Tuesday, of which 188 registered an increase, 139 recorded a fall, while 28 remained unchanged.