Market watch: Stocks hit nine-month high following political clarity

Benchmark index increases 581.38 points to settle at 39,287.65

KARACHI: The benchmark KSE-100 index extended its rally from the previous day as bulls dominated trading on Friday, supporting the index cross the 39,000-point mark after nine months.

The extensive buying seems to be the result of political clarity following the Supreme Court's verdict in the army chief tenure extension case.

On Thursday, the apex court gave the government six months to legislate and clearly specify the terms and conditions of service of the army chief, paving the way for General Qamar Javed Bajwa to stay on until a new law determined his terms of service.

The index shot up as soon as trading began and heavy buying continued in the first session, which closed with a gain of nearly 450 points. The second session further lifted the index but selling pressure towards the end wiped off some of the gains.

At close, the benchmark KSE 100-share Index recorded an increase of 581.38 points, or 1.5%, to settle at 39,287.65.

"A further improvement in the country's foreign currency reserves encouraged investors to engage in extended buying," Arif Habib Limited Head of Research Samiullah Tariq said while talking to The Express Tribune.

There was a correlation between the foreign currency reserves position and the KSE-100 index. "Both have recovered to the (early) March 2019 levels," he said.

The analyst said the six-month extension in the tenure of Army Chief Qamar Bajwa ended political uncertainty in the country. This development also played a pivotal role in triggering extensive buying at the PSX.

Arif Habib Head of Equity Sales Saad bin Ahmed said "the market is expected to cross the 40,000-point mark soon."

JS Global analyst Maaz Mulla pointed out that Pakistan was expected to issue $1 billion worth of Panda bonds in Q1 2020 and State Bank's foreign currency reserves rose by $240 million week-on-week, which supported the stock market's advance.

"Going forward, we expect the market to remain positive, however, investors are recommended to book profit on strength," the analyst added.

In its report, Arif Habib Limited stated that the market rose 746 points during Friday's session, following the resolution of army chief's tenure extension issue. However, the market closed up by 581 points.

"The market saw brisk buying activity with major contribution from banks," he said.

Though the exploration and production sector remained positive, even better performance was seen in refinery and oil marketing sectors.

Banks realised trading volume of 86 million shares, mainly contributed by The Bank of Punjab (51.8 million) and BankIslami (12.8 million).

Chemical and cement sectors trailed banks with trading in 37.7 million and 35.5 million shares respectively.

Among individual stocks, The Bank of Punjab was followed by Pak Elektron (20.1 million shares) and K-Electric (16.4 million), the report added.

Overall, trading volumes increased to 431.9 million shares compared with Thursday's tally of 348.5 million. The value of shares traded during the day was Rs14.5 billion.

Shares of 407 companies were traded. At the end of the day, 299 stocks closed higher, 92 declined and 16 remained unchanged.

The Bank of Punjab was the volume leader with 51.8 million shares, gaining Rs0.43 to close at Rs11.62. It was followed by Pak Elektron with 20.1 million shares, gaining Rs0.45 to close at Rs27.1 and K-Electric with 16.4 million shares, gaining Rs0.09 to close at Rs4.2.

Foreign institutional investors were net buyers of Rs220.7 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.