Market watch: KSE-100 gains on expectations about support fund

Benchmark index rises 191.56 points to settle at 33,442.1

KARACHI: The stock market maintained its bullish trend on Tuesday as investors anticipated heightened activity by state funds following approval of a support fund for the Pakistan Stock Exchange (PSX).

The benchmark index dropped in the early hours of trading. The policy rate hike of 150 basis points to 12.25%, dismal data on fiscal deficit for Jul-Mar FY19 which widened 5% and a plunge in the rupee-dollar parity contributed to the pressure.

However, the PSX’s support fund, a higher allocation for the Public Sector Development Programme (PSDP) in the upcoming federal budget and a surge in global crude oil prices played the role of catalysts in the bullish close of the market.

At the end of trading, the benchmark KSE 100-share Index recorded an increase of 191.56 points, or 0.58%, to settle at 33,442.1.

Topline Securities, in its report, stated that the KSE-100 index remained positive for the second consecutive session as the creation of a support fund encouraged investors to rush for stocks of state-owned companies like Oil and Gas Development Company (OGDC), Sui Southern Gas Company (SSGC), Sui Northern Gas Pipelines Limited (SNGPL) and Pakistan State Oil (PSO). These stocks closed near their upper price locks.

The steel sector outperformed the market where Amreli Steels, Crescent Steel and Mughal Iron and Steel closed at their upper locks. Additionally, International Steels and Aisha Steel Mills were near their upper locks.

“Trading activity remained dull as volumes went down 7%, similarly, the value declined 13%,” the report stated.

Unity Foods, TRG Pakistan and K-Electric were the volume leaders of the day with cumulative volumes of 40 million shares

JS Global analyst Maaz Mulla said the KSE-100 index remained positive, hitting an intra-day high of +299 points and low of -398 points.

He said the volumes decreased 7%, standing at 153 million shares. Unity Foods (+9.4%), TRG Pakistan (-5.5%) and K-Electric (+3.6%) led the volumes with cumulative trading in more than 39 million shares.

On the news front, the policy rate touched an eight-year high at 12.25%, up 150 basis points, as the State Bank of Pakistan (SBP) stepped up efforts to address the macroeconomic challenges, said the analyst.

He said buying was witnessed in the cement sector as investors took the opportunity to accumulate stocks at attractive valuations.

Maple Leaf Cement (+4%) and Pioneer Cement (+5%) hit their respective upper circuits and DG Khan Cement (+3.1%) and Lucky Cement (+3%) were also in the green zone.

Pakistan Oilfields (+5%) and OGDC (+4.4%) were the major movers of the exploration and production sector as crude oil prices edged higher in the international market.

Bank stocks fell despite the interest rate hike. HBL (-1.6%), MCB Bank (-0.8%), Bank AL Habib (-1%) and NBP (-0.3%) remained in the red zone.

“Moving forward, we expect the market to remain choppy and volatile, and recommend investors to stay cautious ahead of the FY20 budget,” he added.

Overall, trading volumes decreased to 153.5 million shares compared with Monday’s tally of 165.5 million. The value of shares traded during the day was Rs5.3 billion.

Shares of 327 companies were traded. At the end of the day, 193 stocks closed higher, 115 declined and 19 remained unchanged.

Unity Foods was the volume leader with 19.5 million shares, gaining Rs0.87 to close at Rs10.12. It was followed by TRG Pakistan with 10.6 million shares, losing Rs0.84 to close at Rs14.44 and K-Electric with 9.5 million shares, gaining Rs0.14 to close at Rs4.04.

Foreign institutional investors were net sellers of Rs277 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.