Market watch: Bulls bounce back in emphatic fashion

Benchmark 100-share index gains 1,306.83 points.

KARACHI: After witnessing a bloodbath on Monday, the index recovered in emphatic fashion on Tuesday, soaring more than 1,300 points to break past the 30,000-point barrier.

After shedding 17% from its recent high and losing over 9% in the last five trading sessions, the Karachi Stock Exchange (KSE)-100 Index closed at 30,233.87 on Tuesday, registering an increase of 4.52% or 1306.83 points.



Volumetric strength was evident with 190 million shares exchanging hands despite most top tier stocks hitting upper price limits.

According to Elixir Securities analyst Jawwad Aboobakar, Monday’s net buying of about $6 million became the key driver to reverse the recent downtrend, pushing index heavy MCB Bank (MCB PA +5%), National Bank NBP (PA +5%), Lucky Cement (LUCK PA +5%) and Engro Corp (ENGRO PA +5%) to their respective upper price limits as investors believed that most selling was absorbed and market was ripe for cherry picking.

“Tuesday’s activity and trading data numbers remained crucial to sustain upside, as locals could easily switch mode and resort to selling in case of heavy foreign selling,” said Aboobakar.

On the other hand, JS Global analyst Ahmed Saeed Khan said the market made a fast recovery.

“After the end of the foreign selling spree on Monday, local investors gained confidence as the KSE-100 index posted the highest gain ever in terms of number of points. Previously, the highest gains posted by KSE were 1,064 points,” he said.

“Many shares in different sectors hit their respective upper limits but the sector that had the most stocks hitting their upper lock was the banking sector (one of the most oversold sectors) with BOP, AKBL, HBL, MCB, ABL, UBL and BAHL all closing at limit up,” added Khan. “The cement sector also remained the focal point of investors’ attention with LPCL, LUCK, PIOC and ACPL hitting their upper locks.

“Fundamentally, there are several positive triggers for the cement sector. As some cement companies are highly leveraged, the recent interest rate cuts will have a positive earnings impact for this quarter along with expected higher local dispatch numbers for the whole sector,” Khan concluded.

Trade volumes fell to 260 million shares compared to 275 million on Monday.

Shares of 372 companies were traded. Of these, 40 companies declined, 321 closed higher and 11 remained unchanged. The value of shares traded during the day was Rs11.4 billion.



K-Electric was the volume leader with 44.8 million shares, gaining Rs1 to close at Rs7.11. It was followed by the Bank of Punjab with 24.6 million shares, gaining Rs1 to close at Rs8.05 and Pak Elektron with 21.2 million shares, gaining Rs2.11 to close at Rs44.44.

Foreign institutional investors were net sellers of Rs560 million worth of shares during the session, according to data maintained by the National Clearing Company of Pakistan.

Published in The Express Tribune, April 1^st,  2015.

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