Market watch: Bourse turns bullish, climbs 866 points

Benchmark index increases 2.8% to settle at 31,837.30

KARACHI: Bulls staged a comeback to the stock market on Thursday and pushed the KSE-100 index up by 866 points as investors cherished the news of International Monetary Fund (IMF) lending $1.4 billion to Pakistan next week.

Late on Wednesday, the IMF announced the disbursement of $1.4 billion to Pakistan under the Rapid Financing Instrument to help improve the country’s financial condition and aid in combating the economic impact of the coronavirus.

The news provided market participants with a renewed stimulus as they made fresh investments. In addition, a recovery in global stock markets lent further support to the local bourse.

Global shares rose on hopes the Covid-19 pandemic was nearing its peak and that governments would roll out more stimulus to support their economies.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.9% while shares in China rose 0.42%. Australian shares were up 2.54%.

A recovery in global oil prices further aided the rally at the local bourse, helping all oil stocks to notch up gains.

Earlier, trading began with a spike and an upbeat investor sentiment helped the market to continue the rally. For a brief period, the index crossed 32,000 points, however, it retreated shortly afterwards.

At close, the benchmark KSE-100 index recorded an increase of 866.03 points, or 2.8%, to settle at 31,837.30.

Arif Habib Limited, in its report, stated that the market saw a jump of 1,038 points during the session and closed with an advance of 866 points, which was the reflection of a combination of factors including 5% increase in the West Texas Intermediate (WTI) crude price, Pakistan Investment Bond (PIB) yields going below 9% and expectation of a further rate cut by the State Bank in the next monetary policy.

“Economic Coordination Committee’s consideration of the issuance of Sukuk-II also paved the way for index heavyweight Hubco to trade near its upper circuit after consolidating in the past couple of sessions,” it said. “Similarly, PSO leapt forward on prospects of Sukuk-II issuance and traded near its upper circuit.”

Among banks, MCB remained steadfast and with the apparent slowdown of selling in HBL and UBL from foreign investors, the index found solid support from the banking sector.

The jump in international crude prices helped Oil and Gas Development Company (OGDC) touch Rs100 mark for the first time since March 16, after which it had kept falling over several sessions and touched an intra-day low of Rs73.25 on March 30.

The cement sector recorded trading volumes of 60.9 million shares, followed by oil and gas marketing companies (27.3 million) and banks (16.6 million).

JS Global analyst Danish Ladhani said overall the market remained bullish with slightly better volumes.

OGDC (+3.3%), Pakistan Petroleum (+4.2%) and Pakistan Oilfields (+3.5%) closed in the green as oil prices rose in the international market on expectations that the world’s largest oil producers would agree to cut production at a meeting later on Thursday.

Cherat Cement (+7.5%) and DG Khan Cement (+7.5%) closed limit up in the cement sector.

Engro (+1.8%), HBL (+1.7%), Hubco (+1.7%), Fauji Fertiliser (+1.9%), OGDC (+3.3%), MCB (+2.8%), Pakistan Petroleum (+4.2%), UBL (+3.9%) and Lucky Cement (+2.9%) contributed to the positive close.

“Going forward, we expect the market to remain positive on the back of OPEC+ meeting and recommend investors to sell on strength,” the analyst said.

Overall, trading volumes increased to 216.5 million shares compared with Wednesday’s tally of 181 million. The value of shares traded during the day was Rs8.5 billion.

Shares of 352 companies were traded. At the end of the day, 276 stocks closed higher, 57 declined and 19 remained unchanged.

Maple Leaf was the volume leader with 21.4 million shares, gaining Rs0.95 to close at Rs23.83. It was followed by Hascol Petroleum with 21.1 million shares, gaining Rs0.54 to close at Rs15.5 and Unity Foods with 12.4 million shares, gaining Rs0.03 to close at Rs10.66.

Foreign institutional investors were net sellers of Rs551.2 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.