market watch: Stocks up as foreign inflows, cement sector play catalyst role

Benchmark KSE 100-share Index gains 401.20 points

KARACHI:  

Pakistan equities roared higher in style on the first trading day after Eid holidays with the benchmark KSE 100-share Index settling comfortably above 38,000 points and near the day’s high.

At close on Monday, the Pakistan Stock Exchange’s (PSX) benchmark index registered an increase of 1.06% or 401.20 points to end at 38,367.96.



Elixir Securities, in its report, said the market was dull in early trade with index-heavy exploration and production (E&P) sector pulling the index briefly into the negative zone as investors tracked an 8% dip in global crude prices during the holidays.

“Activity in the wider market, however, picked up as the day progressed with investors, primarily institutions, both local and foreign, cherry-picking index names.”

Key stocks in the cement sector such as Lucky Cement (+3.5%), DG Khan Cement (+2.3%) and Maple Leaf Cement (+1.5%) traded at their all-time highs and contributed the most to the day’s gains as investors cheered better-than-expected June dispatches.”

E&P stocks also recovered near midday after Pakistan Oilfields (+1%) notified the exchange about a hydrocarbon discovery, which, according to estimates of Elixir Securities, would have an annualised impact of Rs3.25 per share on the company’s bottom-line.

“Meanwhile, Engro Foods (-4.7%) added to the recent losses after a deal on the sale of its stake at a hefty discount to the market,” said the report.

“(We) expect current momentum to push the KSE-100 index to re-test 39,000 points while commencement of earnings season will likely channel fresh liquidity into the market,” commented Elixir Securities analyst Ali Raza.

Locals, however, would continue to track flows and developments on the domestic political front, he added.

Meanwhile, JS Global analyst Ahmed Saeed Khan said the PSX followed the trend in regional and global stock markets as it surged around 1.06% to close at 38,368 points.

“The E&P sector ignored the decline in global crude oil prices and stayed comfortably in the green zone,” he said.

“Pakistan Petroleum Limited (+1.78%) rallied on the back of oil and gas reserves discovery at Makori East-5 in which it has a 21.05% working interest that translates into a positive impact of Rs3.21 per share.”

A rally was also recorded in the cement sector on the back of local demand that surged 9.2% year-on-year in June. Top performers of the sector were Lucky Cement and DG Khan Cement.

Engro Foods continued to remain under pressure on the back of lower-than-expected sale price for controlling interest in the company to Dutch firm FrieslandCampina.

“Moving forward, we expect the market to continue with its positive trajectory and advise accumulation on dips,” said Khan.

Trade volumes increased to 160 million shares compared with previous Monday’s tally of 111 million.

Shares of 323 companies were traded. At the end of the day, 202 stocks closed higher, 97 declined while 24 remained unchanged. The value of shares traded during the day was Rs12.5 billion.



Sui Northern Gas Pipelines was the volume leader with 19.1 million shares, gaining Rs1.83 to finish at Rs39.85. It was followed by K-Electric Limited with 11.1 million shares, gaining Rs0.02 to finish at Rs8.09 and Dewan Cement with 10.8 million shares, gaining Rs0.86 to close at Rs15.46.

Foreign institutional investors were net buyers of Rs221 million during the trading session, according to data maintained by the National Clearing Company of Pakistan Limited.

Published in The Express Tribune, July 12^th, 2016.

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