Market watch: KSE-100 surges 1,195 points as investors cheer support fund creation

Benchmark index rises 3.57% to settle at 34,637.14

KARACHI: The stock market saw a bull-run on Wednesday as the KSE-100 index surged close to 1,200 points in anticipation of creation of a market support fund, which drove investor sentiments during the day.

According to Ahsan Mehanti of Arif Habib Limited, the rupee stability against the dollar on Wednesday also played the role of a catalyst in the massive rise of the stock market.

The KSE-100 index recorded the biggest gain in a single session since January 7, 2019. The index spiked as soon as trading began and stocks rallied throughout the day.

The market shot up 1,256 points during the session but some of the gains were wiped off. Nevertheless, the index managed to cross the 34,600-point mark.

Buoyed by strong sentiments, cement, fertiliser and exploration and production sectors remained entirely in the green. Apart from these, all other index-heavy sectors also closed in the positive zone.

Arif Habib Limited, in its report, stated trading volumes stood healthy at over 150 million for the third consecutive session and crossed the 200-million mark on Wednesday.

At the end of trading, the benchmark KSE 100-share Index recorded an increase of 1,195.04 points, or 3.57%, to settle at 34,637.14.

"Investors are aggressively buying stocks on reports of creation of a market support fund," said JS Research Head of Corporate Equity Sales Syed Atif Zafar while talking to The Express Tribune.

Reports suggested that the government had started work on setting up the support fund worth Rs20 billion, he said. "The fund is expected to be launched by next week."

State-owned National Investment Trust (NIT) would manage the fund and invest in state-owned companies listed at the Pakistan Stock Exchange (PSX) such as Oil and Gas Development Company, Pakistan Petroleum Limited, Pakistan State Oil and many more.

It was the third straight day when the market maintained its uptrend. Such a huge gain was seen after several months. Investors were buying stocks across the board as prices fell to attractive valuations.

However, economic fundamentals continued to deteriorate. "The twin current account and trade deficits have continued to widen despite a huge rupee depreciation and key interest rate hikes," he said.

JS Global analyst Maaz Mulla said the market closed in the black for the third consecutive session with the KSE-100 gaining 1,195 points at 34,637.

"The market kicked off trading on a positive tone, reaching the intra-day high of +1,256 points," he said. "Major heavyweights of the day namely Oil and Gas Development Company (+5%), Pakistan Petroleum (+5%), Engro (+3.8%), Pakistan Oilfields (+5%), Fauji Fertiliser (+5%) and Hubco (+5%) contributed to the positive close."

Traded volumes increased 33% to 203 million shares while traded value rose to $35 million. Volume leaders were The Bank of Punjab (+5%), K-Electric (+8.4%) and Unity Foods (+10%).

Some relief was seen at the bourse on the back of talk that cement manufacturers had agreed on an arrangement under which reservations of Fauji Cement had been addressed.

The cement sector mostly closed limit up where Lucky Cement (+5%), DG Khan Cement (+5%), Maple Leaf Cement (+5%), Pioneer Cement (+5%), Cherat Cement (+5%) and Kohat Cement (+5%) were the major movers.

The exploration and production sector moved up as Pakistan Oilfields (+5%) and Pakistan Petroleum (+5%) and Oil and Gas Development Company (+5%) closed limit up. Moreover, the banking space also remained buoyant where HBL (+3.5%), NBP (+4.5%), MCB Bank (+1.9%) and UBL (+1.1%) were positive.

"Furthermore, we expect the market to continue the similar trend and recommend investors to buy on weakness," the analyst added.

Overall, trading volumes increased to 203.5 million shares compared with Tuesday's tally of 153.5 million. The value of shares traded during the day was Rs5.34 billion.

Shares of 360 companies were traded. At the end of the day, 303 stocks closed higher, 50 declined and seven remained unchanged.

The Bank of Punjab was the volume leader with 25.1 million shares, gaining Rs0.59 to close at Rs12.25. It was followed by WorldCall Telecom with 20.1 million shares, gaining Rs0.01 to close at Rs0.81 and K-Electric with 15.8 million shares, gaining Rs0.34 to close at Rs4.38.

Foreign institutional investors were net sellers of Rs522.4 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.