PSX rebounds on 3-day selling of Energy Stocks

ISLAMABAD: The benchmark KSE-100 index rebounded on Thursday after witnessing a sell-off for the last three days, with analysts attributing the rise to energy sector stocks.

The index was at 39,853.99, up 511.10 points or 1.30 per cent, around 3pm. Head of Equity at Intermarket Securities, Raza Jafri, said energy stocks were doing well after the government constituted a 10-member committee to work on a circular debt settlement plan for gas companies.

“It also appears that leverage unwinding, which had led to aggressive selling in selected technology and refinery shares, is over. This is leading to a swift bounce back in these sectors,” Jafri added.

Former Pakistan Stock Exchange director Zafar Moti said Thursday’s rebound was a very good sign, predicting that the KSE-100 would cross the 40,000 points barrier before the day’s end.

“It appears that the political crisis [due to which the market fell] will linger due to technical reasons. The market can improve if the government focuses on the economy,” he commented.

First National Equities Limited Director Amir Shehzad said the gains appeared to be because of a technical pullback since the market had been under a lot of selling pressure recently. “As long as there is no clarity on the political front, I think this will be considered a pullback,” he commented.

The energy sector’s performance comes on the back of the Finance Division notifiying a 10-member committee to work on a circular debt settlement plan through cash and non-cash releases or adjustments.

Media reports quoting the power division said that the circular debt which stood at Rs2.253 trillion by end of September last year had now reached Rs2.437tr, showing an increase of Rs185bn.

Earlier this week, Prime Minister Shehbaz Sharif had directed authorities to take concrete steps to reduce circular debt. Later, Defence Minister Khawaja Asif had shared that the government would approach the provinces for the implementation of a policy aimed at saving energy, which among other measures, would reduce the timings of markets, restaurants and wedding halls.

Shares opened in the red this week, falling by more than 1,900 points in the last three days. Analysts have attributed the bearish trend to the political crisis in Punjab, along with the deteriorating economic situation.