Market watch: Stocks extend rally as index surpasses 40,000-mark

Benchmark index increases 816.67 to close at 40,531.13

KARACHI: Stocks extended the rally on Wednesday as the index soared over 800 points to power past the 40,000-mark once again.

The bull-run was seen on back of strong investor sentiments, which fuelled buying across the board amid growing institutional interest ahead of major financial results due to be announced later in the week. Meanwhile, bullish global equity markets and surging global oil prices on the back of declining coronavirus cases around the world also lent further support to the index.

Trading kicked-off with a sharp spike, following which the index steadily increased throughout the session. Investors resumed buying spree after mid-day which propelled the index higher.

At close, the benchmark KSE-100 index recorded an increase of 816.67 points, or 2.06%, to settle at 40,531.13.

JS Global analyst Danish Ladhani said equities closed Wednesday on a positive note with the benchmark KSE-100 Index gaining 816 points, closing at 40,531 levels.

"Market remained bullish during the trading session with value buying witnessed ahead of the result season," he said.

MEBL (+0.5%) in the financials announced its consolidated earnings at Rs12.12 per share during CY19 versus Rs6.96 per share (SPLY) with a cash payout of Rs2 per share.

MCB (+3.4%), ENGRO (+2.7%), LUCK (+4.3%), OGDC (+2.9%), PPL (+2.6%), HUBC (+2.1%) and HBL (+1.4%) cumulatively contributed 360 points towards the positive index close.

"However, we expect the market to remain sideways in the short term on the back of uncertainty on the political front; moreover ongoing International Monetary Fund (IMF) review and Financial Action Task Force (FATF) reviews are also key events this month," the analyst said.

A report from Aba Ali Habib Securities said that taking cues from Tuesday's closing, benchmark KSE-100 index extended its bull run primarily on attractive valuation, some clarity on economic front and recovery in Asia-Pacific markets amid ease in coronavirus concerns.

"As per the news sources, the IMF has revised revenue collection target for FY20 to Rs4.9 trillion against Rs5.23 trillion, while FBR has stated that it has revenue collection capacity of up to Rs4.7 trillion," it said.

"We believe the gap of Rs200 billion may set a stage for additional taxes."

Moreover, government has approved a subsidy of Rs2 billion per month for next five months to curb the elevated inflation.

"We believe upcoming FATF meeting, ongoing IMF review and corporate result season may derive investor sentiments," the report added.

Overall, trading volumes increased to 180.3 million shares compared with Tuesday's tally of 161.5 million. The value of shares traded during the day was Rs7.6 billion.

Shares of 362 companies were traded. At the end of the day, 262 stocks closed higher, 79 declined and 21 remained unchanged.

Hascol Petroleum was the volume leader with 16.2 million shares, gaining Rs0.77 to close at Rs23.42. It was followed by Maple Leaf Cement with 12.1 million shares, gaining Rs0.81 to close at Rs23.38 and Unity Foods with 10.5 million shares, gaining Rs0.35 to close at Rs12.56.

Foreign institutional investors were net sellers of Rs756.98 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.