Market watch: Bull-run returns at PSX as index rises 442 points

Benchmark KSE-100 index increases 1.13% to settle at 39,602.87

KARACHI: Pakistan stock market returned to the positive territory on Tuesday and recovered partially from a significant drop of 1,355 points a day ago with the KSE-100 index gaining 442 points.

The tone of the market remained encouraging on the back of scores of reports and events. News that the Consumer Price Index (CPI) dropped to 6.5% in November 2018 against 6.78% in October and average expectation of approximately 7.27% inflation worked in favour of the market.

In addition to that, reports of brokerage houses claiming cement prices in the northern region would increase by Rs7-10 per bag, effective December 5, sparked buying in cement stocks.

Moreover, a successful settlement of both the roll-over week and the MSCI rebalancing of November 30 aided market sentiments, allowing the KSE-100 to gain ground.

At the end of trading, the benchmark KSE 100-share Index recorded an increase of 442.27 points or 1.13% to settle at 39,602.87.



Elixir Securities' analyst Murtaza Jafar said in line with the initial view, the benchmark KSE-100 index recovered its early losses to close at 39,603 on the back of strong buying interest in financial stocks. United Bank Limited (+2.28%), Habib Bank Limited (+2.75%) and MCB Bank (+3.15%) collectively contributed 146 points to the day's gains.

He pointed out that the CPI for November 2018 rose 6.5% year-on-year, a level which was below street expectations of 7.27% and Elixir Research's projection of 7.4% for the month.

"The lower-than-expected reading was attributable to the communications and apparatus segment where prices remained flat month-on-month while Elixir had estimated an increase of 17.3% month-on-month based on the weekly data compiled by the Pakistan Bureau of Statistics," Jafar said.

"During the day, our channel checks suggested that cement players in the north will likely be increasing retail prices by Rs10 per bag (from Wednesday) to an average of Rs608 in order to pass on the cost-push impact from last week's rupee depreciation."

This helped the cement sector recover from the day's lows as most cement stocks were trading at their lower circuits in early morning hours. However, they still closed deep in the red.

"Going forward, we expect financial stocks to lead the gains on the back of strong buying by local institutions and the index is all set to test resistance around 40,200-40,500," the analyst said.



Overall, trading volumes increased to 195.9 million shares compared with Monday's tally of 164.4 million. The value of shares traded during the day was Rs11.2 billion.

Shares of 359 companies were traded. At the end of the day, 230 stocks closed higher, 113 declined and 16 remained unchanged.

Maple Leaf Cement was the volume leader with 19.7 million shares, losing Rs2.17 to close at Rs43.84. It was followed by K-Electric with 10.5 million shares, gaining Rs0.12 to close at Rs5.47 and The Bank of Punjab with 9.8 million shares, gaining Rs0.06 to close at Rs13.06.

Foreign institutional investors were net sellers of Rs466.4 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.