Market watch: Stocks stage comeback despite political noise, heavy foreign selling

Benchmark index gains 836.45 points to settle at 40,453.64

KARACHI: The stock market bounced back on Wednesday after four days of battering, overcoming both political noise and massive selling by foreign investors in Tuesday’s session.

Cherry-picking of oversold index names by local investors was the game changer as notable stocks in heavyweight sectors stood in the green by the session’s end.

At close, the benchmark KSE 100-share Index registered an increase of 836.45 points or 2.11% to finish trading at 40,453.64.

According to Elixir Securities, Pakistan equities snapped a four-day losing streak and bounced back on Wednesday, pushing the benchmark index higher by over 2%.

“Despite large net outflow of foreigners yesterday (Tuesday) and prevailing noise on the political front, the market opened positive and gained steadily throughout the day as locals bought oversold index names that looked ripe for cherry-picking,” Elixir said.



Major contribution to the gains came from blue chips among which Oil and Gas Development Company (OGDC, +2.1%), Pakistan Petroleum (PPL, +3.5%), MCB Bank (+3.6%), Habib Bank (HBL, +2.2%), Pakistan Oilfields (POL, +3.9%) and Engro Corporation (+3.1%) emerged as top movers.

Turnover in the wider market, however, didn’t match the excitement as only $66 million worth of shares changed hands on the KSE All-share Index against past seven-day average of $69 million.

Notably, Mari Petroleum (+4.9%) closed near its upper price limit after the company apprised investors of a hydrocarbon discovery.

“We may see more value-hunting from locals in the near term, however, direction of foreign flows will remain crucial in sustaining the upside as triggers remain limited and uncertainty over domestic politics is very much in place,” the report added.

JS Research analyst Maaz Mulla said bulls ruled the bourse, taking the KSE-100 index up by 836 points at 40,453.
"The market witnessed a recovery as value investors availed the opportunity to buy stocks at attractive prices. Positivity can be attributed to the PML-N heavyweights' meeting in London, which decided to put forward Shehbaz Sharif's name as candidate for prime minister for 2018 elections," Mulla said.
Increase in heavyweight stocks including HBL (+2.21%), OGDC (+3.61%), PPL (+3.52%) and United Bank Limited (UBL, +1.50%) steered the market upwards. Volumes stood at 117 million shares, registering a decrease of 16%.
Pak Elektron (-0.46%) remained the volume leader with 11 million shares changing hands. In key sectors, banks led the rally as heavyweights HBL (+2.21%), MCB Bank (+3.63%) and UBL (+1.50%) closed in the green zone.


Cement stocks also staged a rebound as Lucky Cement (+3.30%), Cherat Cement (+2.05%), Maple Leaf Cement (+2.28%) and Power Cement (+2.01%) closed higher. The exploration and production sector was also positive on the back of recovery in international crude oil prices.
"Moving forward, we expect the market to remain range bound in the short term. We recommend investors to book profits on strength," he added.

Overall, trading volumes fell to 116 million shares compared with Tuesday's tally of 139 million.

Shares of 378 companies were traded. At the end of the day, 268 stocks closed higher, 98 declined while 12 remained unchanged. The value of shares traded during the day was Rs6.9 billion.

Pak Elektron was the volume leader with 11.04 million shares, losing Rs0.27 to close at Rs58.72. It was followed by Dost Steels with 10.57 million shares, gaining Rs0.95 to close at Rs13.32 and TRG Pak with 9.54 million shares, gaining Rs0.85 to close at Rs33.20.

Foreign institutional investors were net sellers of Rs475 million during the trading session, according to data compiled by the National Clearing Company of Pakistan Limited.