Shares managed to make modest gains on Tuesday, with analysts attributing this to the rupee’s recovery, as well as the International Monetary Fund (IMF) statement that Pakistan has completed all previous actions necessary for the assessment.
The benchmark KSE-100 index closed at 40,191.61 points, up 115.65 points, or 0.29 percent from yesterday’s close.
The index, which closed in the red yesterday as record inflation led to selling, opened negative and the market lost more than 300 points shortly after trading resumed.
However, the KSE-100 later recovered with an intraday high of 40,458.09 points.
Head of Research at Intermarket Securities, Raza Jafri, said the IMF’s “reassurance that all previous actions have been met is like a shot in the arm”.
“There is also a growing belief that even if politics remains boisterous in the short term, Pakistan’s economy will stabilize. This improves sentiment, which is also reflected in the currency market.”
Salman Naqvi, head of research at Aba Ali Habib Securities, said there were a number of reasons for the “positivity” of the stock market, including a cut in commodity prices internationally, better tax collection figures, the encouraging news from the IMF and the rupee stronger.
“These things are apparently beneficial,” he said. In addition, Pakistan’s Election Commission (ECP) verdict in the case of banned funding against the PTI did not appear as damaging as expected, Naqvi said.
“It could have dented the market, but it seems like a neutral decision. The market has responded positively. “
Naqvi said the price of the market in the coming days will be determined by the release of the tranches by the IMF, the exchange rate and inflation figures.
Ahsan Mehanti of Arif Habib Corporation also attributed the rise in the KSE-100 index to the rupee recovery and the IMF statement.
He added that Treasury Secretary Miftah Ismail’s assurances of timely debt repayments and the ECP’s judgment “played a catalytic role in the bullish activity.”
Earlier today, the rupee gained 46 paise in the interbank market – the third straight day of the local currency recovery.
Overall, the PKR has gained Rs 1.56 in the interbank market since Friday.
Before that, the rupee had fallen continuously since July 16.
Separately, the IMF representative in Islamabad, Esther Perez Ruiz, said Pakistan has completed the final preliminary action needed for the combined seventh and eighth revisions of the Fund by raising the petroleum development tax (PDL).
“The increase in PDL on July 31 meets the last prior action for the combined seventh and eighth grades. The [Executive Board] The meeting is tentatively scheduled for the end of August, once sufficient funding guarantees have been confirmed,” she said in a statement.
Pakistan and the IMF signed a $6 billion bailout deal — Extended Fund Facility (EFF) — in 2019, but the release of a $1.7 billion tranche (seventh and eighth) has been suspended since earlier this year, when the IMF raised concerns. on compliance with the agreement.