Market watch: KSE-100 rallies on restoration of investor confidence

Benchmark index rises 465.14 points to settle at 35,403.07

KARACHI: The stock market staged a modest rally on Thursday as widespread uncertainty, which enveloped the bourse before budget announcement, gradually vanished and a clear picture of Pakistan's economy emerged.

The movement of the KSE-100 index displayed a much stable upward march, which reflected the confidence gained by investors after the federal budget, said Aba Ali Habib Securities in its report.

"Optimism in the market was attributed to the restoration of investors' confidence post-budget," it added.

Arif Habib Limited analyst Ahsan Mehanti said stocks were higher due to investor confidence in government targets of the external account imbalance, tax revenue of Rs5.55 trillion and fiscal stability in the federal budget for FY20.

He added that a late-session surge in global crude oil prices played the role of a catalyst in bullish close of the market.

Earlier, the trading began on a negative note but shortly afterwards stocks began to rally, buoyed by positive investor sentiments. The bullish trend continued throughout the day and helped the market close near the 35,500-point mark.

The cement sector sparked a massive activity as DG Khan Cement, Cherat Cement, Kohat Cement and Maple Leaf Cement touched their upper locks while rest of the stocks also gained. Majority of the stocks in the sector notched up gains.

On the back of the buying spree, the fertiliser and exploration and production sectors also remained entirely in the green.

At the end of trading, the benchmark KSE 100-share Index recorded an increase of 465.14 points, or 1.33%, to settle at 35,403.07.

Arif Habib Limited, in its report, stated that the market opened on a negative note but buying activity commenced soon afterwards with major activity in cement and chemical stocks.

"Pharmaceutical stocks hit their upper circuits in early trading and a similar trend was noted in fertiliser and chemical stocks," it said. "Engro remained prominent in Thursday's trading."

During the session, a decrease in the rupee-dollar parity sparked concern among investors, but buying activity dominated the trading. By the end of the session, a majority of cement stocks hit their upper circuits.

Major trading volumes were recorded in the cement sector (29.5 million), followed by chemical (17.7 million) and technology sectors (17 million).

Stock-wise, Maple Leaf Cement topped the chart, followed by The Bank of Punjab and TRG Pakistan, it said.

In its report, Topline Securities said a continued positive trend in equities was witnessed as the KSE-100 index closed at 35,403 points with a gain of 1.33%.

"Lower-than-expected taxation measures for select sectors turned sentiments positive among investors," it said. "Cumulatively, in the last two days, the index has gained 2.1%."

On the back of increase in cement prices by Rs15 per bag with effect from Thursday, stocks of cement companies like DG Khan Cement, Maple Leaf Cement, Lucky Cement and Fauji Cement, among others, gained ground with increases in the range of 3-5%.

Traded volumes increased by 2% and traded value rose by 14%, the report added.

Overall, trading volumes increased to 154.3 million shares compared with Wednesday's tally of 150.98 million. The value of shares traded during the day was Rs5.6 billion.

Shares of 339 companies were traded. At the end of the day, 228 stocks closed higher, 88 declined and 23 remained unchanged.

Maple Leaf Cement was the volume leader with 12.5 million shares, gaining Rs1.08 to close at Rs24.1. It was followed by The Bank of Punjab with 10.4 million shares, gaining Rs0.26 to close at Rs10.05 and TRG Pakistan with 9.5 million shares, gaining Rs0.97 to close at Rs16.79.

Foreign institutional investors were net sellers of Rs399.1 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.