Stocks stage recovery as KSE-100 gains 451 points

Benchmark index increases as investors resume buying at attractive valuations

Our Correspondent May 27, 2018

KARACHI: In a positive turn of events, the stock market recovered from the bloodbath of the previous week with the KSE-100 index witnessing an increase of 451 points or 1.1% to settle at 42,074.09.

However, the increase came largely due to the one-off gain on Tuesday with the index remaining range-bound on the remaining days.

Nevertheless, stocks bounced back from a three-week losing streak that cumulatively dragged the index down by 8.6%, according to an Elixir Securities report.

Market watch: KSE-100 continues to bleed, ends below 45,200

The week kicked off on a positive note, although activity remained dull. Matters improved on Tuesday as the index rallied 1,095 points, which helped recover losses from the preceding week. The 2.63% gain in a single day was driven by attractive valuation that enticed investors to make fresh entry in the market. Furthermore, speculation of finalisation of caretaker prime minister also resulted in the equity market depict a robust return.

Market watch: KSE-100 ends negative for fourth successive session

Unfortunately, the winning streak did not last as profit-taking, continued economic concerns and unabated foreign selling led the index to slip in to the red zone in its last two sessions.

That said, average daily volumes for the outgoing week increased by 4% to 119 million shares, while average traded value contracted by 3% to $43 million.

In terms of sectors, buying at the KSE-100 index was led by commercial banks (+212 points), which rallied due to expectations of an interest rate hike, fertilisers (+136 points), oil and gas exploration companies (+83 points). On the other hand, selling pressure in chemicals (-29 points), cements (-27 points) and auto assemblers (-21 points) dragged the index lower. The auto sector has been underperforming consistently as the government barred non-filers from buying a new car, which is likely to hit sales of the assemblers.

Market watch: Bourse turns bullish as KSE-100 surges nearly 1,100 points

Meanwhile, scrip-wise, PPL (+84 points), ENGRO (+54 points), HUBC (+50 points), FFC (+46 points) and BAHL (+41 points) remained positive contributors. Also, INDU has lost around 18% since budget announcement to date, while HCAR and PSMC lost 15% and 9% respectively.

In addition, foreign selling arrived at $26.09 million vis-a-vis $19.97 million in the week before. Gauging activity of foreign market participants, we witnessed massive net sell-off in commercial banks ($17.23 million) and cement ($5.93 million). However, on the local front, insurance companies and banks/DFIs absorbed the pressure, buying equities worth $23.16 million and $4.35 million, respectively.

Other major news of the week; government got FY19 budget passed by NA, oil imports climbed 30.4% in 10 months, Moody’s reaffirmed Pakistan’s rating, but vulnerabilities remain, auto assemblers stop sales to non-filers and DG Khan Cement announced completion of Pakistan’s biggest $300 million plant.

Winners of the week

Pakistan Tobacco

Pakistan Tobacco Company Limited manufactures and sells cigarettes.

Feroze 1888

Feroze 1888 Mills Ltd manufactures and sells a wide range of cotton towels and fabrics.

Losers of the week

Bata Pakistan

Bata Pakistan Limited manufactures and sells rubber, leather and microlon sandals and shoes.

National Foods

National Foods Limited is a diversified food manufacturer. The group’s products include recipe blends, dehydrated vegetables, pickles, salts, snack foods, desserts and a number of kinds of health foods. 

Published in The Express Tribune, May 27th, 2018.

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