PHOTO: AFP
At the close, the KSE 100-share index settled at the peak of 36,235, up 0.7% or 261.30 points, as the market resumed its northbound ride after Friday’s breather on excitement over possible upgrade to the emerging market status.
The index, which measures the performance of most liquid stocks, had surged 3.6% last week.
Analysts believe the bullish trend in stock prices is a result of Pakistan’s possible reclassification from a frontier to an emerging market by the MSCI, an international firm that provides investment decision support.
MSCI is going to announce its decision in June on whether Pakistan meets criteria for the emerging market status. Global institutional investors use different MSCI indices - such as frontier, emerging, China and US markets - to create balanced portfolios to generate maximum returns while keeping in view their overall risk appetite.
Although the actual reclassification of Pakistan will take effect a year after the announcement, global investors tend to start factoring in the reclassification ahead of the actual change, prompting massive inflows of funds in the case of a favourable decision.
The recent increase in share prices comes after almost nine months of bearish trend in the stock market. Foreign investors pulled out their investments in the wake of a global meltdown in equity markets for the most part of the fiscal year starting from July 2015.
The Pakistani share market had remained largely flat in 2015, as the KSE-100 index gained just 685 points, resulting in a meagre annual return of 2.1%.
Elixir Securities, in its report, said trading kicked off on a higher note on Monday with pharma and oil stocks taking a head-start as the index swiftly gained 200 points.
“Investors cheered news of possible approval of price hike by the drug regulator that led to major pharma stocks opening gap up and closing higher. Searle Pakistan rose 3.9%, Highnoon Laboratories 3.2% and Abbott Laboratories 2.1%.
“Oil shares also supported the index as they initially tracked mild gains in international crude prices and later attracted local institutional buying,” said the report.
Financial stocks, primarily United Bank Limited (+3.4%) and MCB Bank (+1.9%), gained as institutions continued to build positions in anticipation of upgrade to the emerging market index.
“Wider market generated respectable turnover with the benchmark seeing $100 million worth of shares exchanging hands while most volumes went through small and mid-caps as retail investors got aggressive despite market nearing record highs,” said Elixir Securities analyst Faisal Bilwani.
JS Global analyst Ahmed Saeed Khan said the major index-mover was the pharmaceutical sector. “Star performers in the sector were Shifa Industries (+5%), Searl Pak (+3.99%) and Abbott Labs.”
The oil sector too closed in the black as global crude prices rebounded from lows over the weekend to trade above the psychological barrier of $46 per barrel (Brent). Top performers were Pakistan Oilfields (+2.04%), Oil and Gas Development Company (+1.77%) and Mari Petroleum (+1.50%).
“We remain bullish on the market and expect further upside from these levels although a short-term correction cannot be ruled out,” he added.
Trade volumes fell to 273 million shares compared with Friday’s tally of 286 million.
Shares of 355 companies were traded. At the end of the day, 194 stocks closed higher, 141 declined while 20 remained unchanged. The value of shares traded during the day was Rs12.8 billion.
WorldCall Telecom was the volume leader with 26 million shares, gaining Rs0.15 to finish at Rs1.89. It was followed by Sui Northern Gas Pipelines with 24.3 million shares gaining Rs1.45 to close at Rs36.04 and Dewan Cement with 21.2 million shares gaining Rs0.94 to close at Rs15.48.
Foreign institutional investors were net buyers of Rs90 million during the trading session, according to data compiled by the National Clearing Company of Pakistan Limited.
Published in The Express Tribune, May 10th, 2016.
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