Market watch: Bourse turns bullish over expected creation of support fund

Benchmark index rises 1,010.15 points to settle at 35,959.43


Our Correspondent May 29, 2019
Benchmark index rises 1,010.15 points to settle at 35,959.43. PHOTO: FILE

KARACHI: Pakistan stock market bounced back on Wednesday and spiked over 1,000 points to close just below the 36,000-point mark.

The bourse turned bullish following confirmation by high government officials that they were working on creation of a market support fund. The fund, aimed at stabilising the stock market, would be launched in the next 10 days.

Adviser to PM on Finance Dr Abdul Hafeez Shaikh and Securities and Exchange Commission of Pakistan Chairman Farrukh Sabzwari had confirmed the development, market analysts said.

Stockbrokers speculate the size of the fund will be around Rs20 billion. State-owned mutual fund National Investment Trust (NIT) would manage the fund and inject it probably into state-owned listed companies including Oil and Gas Development Company, Pakistan Petroleum Limited, Pakistan State Oil and many more.

Earlier in 2008, the government created a similar fund worth Rs20 billion, which helped the market recover. That fund was also managed by NIT.

The SECP also softened rules to allow listed firms to buy back their own shares from shareholders to build confidence among equity investors. The development sparked a rally as buying was seen across the board.

According to Aba Ali Habib Securities, the rupee's appreciation against the dollar during the day improved market sentiments.

The market shot up as soon as trading began and within minutes the index rose 150 points. Clarity on the market opportunity and support fund gave much-needed confidence to investors and the drop of 750 points on Tuesday was recovered on Wednesday, said Arif Habib Limited.

During the session, the index increased 1,044 points and closed (unadjusted) near the day's high with a gain of 1,010 points, it said.

At the end of trading, the benchmark KSE 100-share Index recorded an increase of 1,010.15 points, or 2.89%, to settle at 35,959.43.

JS Research analyst Maaz Mulla said trading kicked off positive, hitting the day's high at +1,044 points and closed at 35,959 (up 1,010 points).

"Significant buying came following confirmation by high government officials that they were working on creation of the market support fund," he said. "Bulls continued to buy across the board as activity in all key sectors such as cement, bank and exploration and production was seen."

Local investors aggressively participated in market trading during the day.

Overall volumes stood at 182 million shares while the traded value came in at $51 million, the analyst said.

The Bank of Punjab (+1.2%), Fauji Cement (+4.6%) and Unity Foods (+9.2%) cumulatively contributed more than 39 million shares to the total volume.

Active participation was witnessed in the cement sector by local and foreign investors where DG Khan Cement (+5%), Lucky Cement (+5%), Pioneer Cement (+5%) and Maple Leaf Cement (+5%) all closed at their respective upper circuits on the back of increase of Rs20-25 in cement prices per bag in the northern region.

Banking and exploration and production sectors contributed to the climbing index as UBL (+1.5%), HBL (+1.2%), MCB Bank (+2.5%), Bank Alfalah (+2.8%), NBP (+4.9%), Pakistan Oilfields (+4.9%), Oil and Gas Development Company (+3.5%) and Pakistan Petroleum (+2.8%) remained in the green zone.

"Moving forward, we expect the market to remain positive, however, we recommend investors to book profit on strength," the analyst added.

Overall, trading volumes increased to 182.5 million shares compared with Tuesday's tally of 152.3 million. The value of shares traded during the day was Rs7.6 billion.

Shares of 334 companies were traded. At the end of the day, 263 stocks closed higher, 58 declined and 13 remained unchanged.

The Bank of Punjab XD was the volume leader with 17.5 million shares, gaining Rs0.13 to close at Rs11.21. It was followed by Fauji Cement with 11.8 million shares, gaining Rs0.78 to close at Rs17.6 and Unity Foods with 9.9 million shares, gaining Rs0.96 to close at Rs11.44.

Foreign institutional investors were net sellers of Rs697.5 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.

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