Market watch: Index posts highest gain of 2016, up 580 points

Benchmark KSE-100 index rises 1.85%

KARACHI: The benchmark-100 index continued its northward journey, ending 1.85% higher on Monday, as news of the central bank maintaining the policy rate at 6% spurred investors to buy banking stocks.

The increase was the index’s highest this year so far, as a bearish momentum has made way for a surge in stock prices over the last few sessions.

At close, the Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index rose 1.85% or 579.55 points to end at 31,878.15.

JS Global analyst Ovais Ahsan said banking sector led the way as the KSE-100 index ended positive for a  seventh successive session.



“The surge was led by the banking sector on the back of SBP keeping the policy rate unchanged and inflation for the month of January clocking in at 3.23% versus the market’s expectation of 3%-3.10%. Most stocks in the sector remained comfortably in the green zone throughout the day.

“Global Crude Oil prices recovered over the weekend to trade above the $35.50 mark (Brent), thus attracting investor’s interest towards the extraction and production (E&P) sector. Top performers of the sectors were Pakistan Oilfields (POL, +1.12%) and PSO (+2.87%), respectively.

“Moving forward, we expect the market to continue with its positive direction led by the banking sector. Our top pick in the banking space is UBL.”



Meanwhile, Elixir Securities report noted that equities gained sharply on Monday to settle above 31,800 primarily on gains in financials after central bank kept benchmark borrowing rates unchanged over the weekend.

“Stocks opened gap up with index heavy banks leading the charge including Habib Bank (+5%), United Bank (+5%), MCB Bank (+5%).

“Wider market soon caught up to the gains as reports and flows suggested no major foreign selling in index names.

“Pakistan State Oil (PSO, +2.87%) also rallied from the word go on technical breakout, however, some attribute Monday’s gains to weekend reduction in retail petroleum prices that could trigger volumetric growth. Nevertheless, depressed valuations owing to wider market pressure did present an excellent opportunity for cherry picking in country’s largest oil marketing company (OMC).

“Inflation reading that was released mid-day with CPI inflation clocking at 3.32% year-on-year for January against surveyed 3.05%.

Trade volumes rose to 134 million shares compared with Friday’s tally of 141 million shares.

Shares of 335 companies were traded on Monday. At the end of the day, 204 stocks closed higher, 107 declined while 24 remained unchanged. The value of shares traded during the day was Rs8.1 billion.

Bank of Punjab was the volume leader with 21.8 million shares, gaining Rs0.57 to finish at Rs8.97. It was followed by Pak Elektron (XR) with 9.5 million shares, gaining Rs1.65 to close at Rs63.27 and Fauji Cement with 6.5 million shares, gaining Rs0.03 to close at Rs38.92.

Foreign institutional investors were net sellers of Rs157 million during the trade session, according to data maintained by the National Clearing Company of Pakistan Limited.

Published in The Express Tribune, February 2^nd, 2016.

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