Market watch: Stocks bounce back, KSE-100 gains over 1,000 points

Oil and banking sectors lead the increase, foreign buying acts as catalyst

KARACHI: The KSE-100 Index bounced back in emphatic fashion, shooting past the 42,300 mark with a rise of 2.5% on Wednesday as attractive valuations and foreign buying helped stock prices after a long hiatus in the red.

The index had been hovering around the 41,000 level for the past few weeks, suggesting that a bottom had been found.

But lack of positive triggers and a less-than-optimistic economic situation meant investors opted to stay on the sidelines.

News of penalty on HBL's New York branch had also dampened sentiments, as the index-heavy stock casted a shadow over the sector dragging share prices down.

However, on Wednesday, the situation changed with banking and oil stocks reviving investor interest.

The relief rally propelled the index forward to make an increase of 1,030.82 points.

At close, the benchmark KSE 100-share Index recorded a rise of or 2.50% to end at 42,310.12.



Despite Wednesday's positive session, the index may continue to remain volatile due to a lack of positive triggers.

According to Elixir Securities, Pakistan equities bucked the recent sideways trend and surged to close 2.5% higher on buying primarily in blue-chips reportedly led by institutions despite recent concerns on macros and domestic politics.

"Activity in the wider market also witnessed a spike with benchmark KSE All Shares Index recording volumes of over 170 million shares, up 75% from Tuesday and 40% from this month's average," stated the report.

Index heavy oil stocks charged ahead in early trade with Oil & Gas Development Company (OGDC PA +5%) briefly hitting upper price limit during last minutes of trading.

Moreover, banks witnessed considerable interest and helped benchmark cross 1,000-point positive mark with National Bank (NBP PA +3.8%) testing upper price limit.

Other notable gainers included Engro Corp (ENGRO PA +4.5%), Pakistan State Oil (PSO PA +3.9%) and Lucky Cement (LUCK PA +2.6%).



"We see current momentum to push market to test 43,000, however, strong resistance and profit booking will likely keep upside in check as domestic politics and macro concerns remain a dampener," Elixir added.

JS Global analyst Maaz Mulla said that bulls ruled the local bourse on Wednesday, taking the KSE-100-index up by 1,031 points to close at 42,310 level where banking, cement and E&P sectors led the optimism.

Increase in the heavy weight stocks including HBL (+4.42%), OGDC (+4.83%), UBL (+2.90%), PSO (+3.86%) and ENGRO (+4.51%) caused the market a weight gain.

MLCF (+0.86%) posted financial results for FY17, reporting an EPS of Rs9.06 and final DPS of Rs1.75. Also, HASCOL (+4.92%) closed near its upper circuit on the back of news regarding issuance of 20% rights shares at Rs165/share. PSMC (+2.60%), MTL (+1.15%) and AGTL (+1.80%) gained on account of positive monthly sales numbers released by PAMA.

"We believe positivity in the market has been pulled by attractive multiples, where rebalancing of FTSE is also likely bringing in activity. However, on the bank of lack of substantial market triggers we recommend investors to book profits at these high levels," Mulla added.



Overall, trading volumes rose to 173 million shares compared with Tuesday's tally of 99 million.

Shares of 388 companies were traded. At the end of the day, 285 stocks closed higher, 82 declined while 21 remained unchanged. The value of shares traded during the day was Rs9.6 billion.

Azgard Nine was the volume leader with 22 million shares, losing Rs0.22 to close at Rs13.39. It was followed by TRG Pakistan with 11.1 million shares, gaining Rs1.27 to close at Rs38.78 and Bank of Punjab with 8.9 million shares, gaining Rs0.06 to close at Rs9.99.

Foreign institutional investors were net buyers of Rs220 million during the trading session, according to data compiled by the National Clearing Company of Pakistan Limited.