Shares at the Pakistan Stock Exchange (PSX) recovered nearly 4,000 points on Friday after the index suffered its largest-ever plunge a day earlier, causing losses to the tune of Rs820 billion loss to equity investors following Indian drone attacks in major cities across the country.
The benchmark KSE-100 index climbed 799.65, or 0.77 per cent, to stand at 104,326.46 from the previous close of 103,526.81 at 11:06am.
At 4:31pm, the index recovered 3647.82, or 3.52pc, to stand at 107,174.63 from the last close.
Mohammed Sohail, chief executive of Topline Securities, said that after falling sharply by 6pc yesterday, the stocks had recovered.
“So far, there has been no news of any major escalation which helped restore confidence,” he said.
Yousuf M. Farooq, director research at Chase Securities, noted, “Stocks on the PSX remained volatile today, opening higher as participants increasingly factored in that an all-out war with India is unlikely.
“Some investors have begun accumulating stocks trading at highly attractive valuations following the sharp drawdown over the past week,” he added.
“Technical analysts also noted this morning that the market had entered oversold territory,” Farooq said.
On yesterday’s decline, he stated it was primarily “driven by individuals unwinding leveraged positions and redemptions from mutual funds”.
“Such corrections and short-term volatility are a normal feature of equity markets,” he said, adding that they continued to “advise that only long-term investors participate in the market, maintaining discipline during periods of uncertainty and gradually building their portfolios over time”.
“Market attention now remains on developments in Pakistan-India tensions and the IMF board meeting scheduled for today, where Pakistan’s next tranche will be considered,” he said.
Sana Tawfik, head of research at Arif Habib Limited, noted that the primary reason behind the recovery was investor optimism regarding the International Monetary Fund (IMF) meeting today.
“Most likely, the Executive Board will approve the tranche today,” she said.
The Fund is set to meet today to approve the immediate disbursement of about $1bn to Pakistan under the ongoing Extended Fund Facility and allow an additional arrangement for the $1.3bn Resilience and Sustainability Facility (RSF).
Furthermore, she highlighted that the market now provided “attractive valuations” due to yesterday’s market dip.
“Lastly, fears of a major escalation have been placated due to no major development on that front,” she added.
Awais Ashraf, director research at AKD Securities, said that the “panic triggered by yesterday’s drone attacks from the Indian side is subsiding, as the Pakistan Armed Forces demonstrated ability to intercept the threats has reassured investors”.
“The recent market correction following the onset of the escalation has presented investors with a valuable opportunity to build their portfolios at more attractive valuations,” he added.
The market capital had lost Rs1.3 trillion in value in the previous three sessions as jittery investors preferred to exit the market amid growing uncertainty about the economic outlook as geopolitical tensions turned into a military standoff after India hit three cities with missiles in the wee hours of Wednesday, martyring over 31 innocent civilians. Pakistan’s armed forces responded with the downing of five Indian fighter planes.
The market crash followed alarming geopolitical developments after ISPR Director General Lt Gen Ahmed Sharif Chaudhry announced that Pakistani forces had neutralised 25 drones sent by India since last night. He also confirmed that four army personnel were injured after one drone managed to partially strike a military target, despite the majority being intercepted.
More to follow
