Despite the uncertain law and order situation in Karachi on Wednesday, equity investors reacted overwhelmingly to reports that the International Monetary Fund (IMF) gave a positive response to cash-strapped Pakistan’s request for a fresh bailout package.
“(The) stocks closed bullish amid higher trades after IMF offered a $5 billion facility for Pakistan’s balance of payment support and debt repayment,” said senior stocks analyst Ahsen Mehnati of Arif Habib Securities.
Wednesday saw socio-economic life in the violence-hit metropolis completely paralysed given Tuesday’s bombing at an election office of the Muttahida Qaumi Movement (MQM) at People’s Chowrangi.
The terrorist attack killed three MQM supporters while Wednesday witnessed the death toll in the attack increasing to five as injuries to two others proved fatal.
The MQM on Tuesday had announced to observe Wednesday as a day of mourning with its leader Altaf Hussain appealing to traders, transporters and masses to share the party’s grief.
As expected, the city responded positively and all businesses, educational institutions and offices remained closed. Attendance in offices and factories was thin as no public transport was seen plying on the city roads until 5pm.
Petrol pumps also kept barriers erected through the day and only started providing commuters with fuel after 4pm when representatives of petroleum dealers announced to open their filling stations.
Shopping centers and other retail business activities were also resumed after a similar announcement was made by the All Karachi Traders Association. While the entire city was shut, investors at Karachi Stock Exchange remained unwary to the outside situation and reacted positively to the IMF’s reported willingness to bail the dollar-hungry Pakistan out of its present liquidity crunch emanating mainly from the country’s fast depleting foreign exchange reserves currently standing at $7 billion.
The IMF, according to Adviser to Prime Minister on Finance Dr Shahid Amjad, was ready to lend Islamabad at least $5 billion which analysts said was a “flexible” Extended Fund Facility (EFF) to be disbursed and repaid over a period between three to ten years.
The positive news made the benchmark KSE 100-share index hit a historic high of 18,779.66 points gaining 132.37 points against Tuesday’s 18,647.29 points.
Amid higher trading volumes, which increased to 219.87 million shares from 171.87 million of the previous day, the value of the shares traded also grew to Rs 6.380 billion compared to the previous day’s Rs 4.93 billion.
The market capital also swelled to Rs 4.596 trillion as against Rs 4.563 trillion on Tuesday. Of the total 370 scrips trade, the value of 217 appreciated and 135 depreciated. Some 18 remained unchanged to this effect.
Engro Corporation remained in the limelight, with investors expecting the company to post positive results after improved performance by its fertiliser business. Fauji Cement also remained in the limelight due to speculation of exceptional results.
Engro Corporation Ltd rose 2.76 per cent to 138.85 rupees and Fauji Cement Company Ltd was up 4.41 per cent to 8.76 rupees. In the currency market, the rupee ended almost steady at 98.38/98.43 against the dollar compared to Tuesday’s close of 98.36/98.42. Overnight rates in the money market fell to 9.40 per cent from Tuesday’s close of 9.50 percent.
According to stocks analysts, the day saw institutional interest in stocks across the board. This, they said, was amid recovery in global commodities, strong announcements in oil, banking stocks and speculations ahead of quarter-end results this week.
Mehanti, however, said equity investors were concerned over the security unrest and had announced a call for strike in the volatile city.
Regardless of the reasons, the traders say, one day closure costs trade and business in this financial capital of the country at least Rs 10 billion.
This amount, they believe, is not inclusive of losses daily wagers incur when the city is shut for one reason or the other.
