Market watch: KSE-100 gains slightly as IMF approves debt relief

Benchmark index increases 87.27 points to settle at 31,329.46

KARACHI: The stock market extended gains in a range bound session on Thursday and rose 87 points as investors took cue from foreign minister’s announcement that the International Monetary Fund (IMF) had decided to grant a one-year relief to Pakistan.

The news, however, failed to create much enthusiasm among investors and trading remained lacklustre with some investors choosing to stay on the sidelines.

Surprisingly, the drop in international oil prices sparked confusion among stock market participants as they were unsure whether to offload or cherry-pick oil shares.

Earlier, trading began with a dip, however, strong investor sentiment in early hours helped erase losses and pushed the index into positive territory. For the rest of the day, the index traded in a narrow range and managed to close above 31,300 points.

At close, the benchmark KSE-100 index recorded an increase of 87.27 points, or 0.28%, to settle at 31,329.46.

Arif Habib Limited, in its report, stated that the market moved in a narrow range between +205 points and -226 points, closing the session up by 87 points.

Wednesday’s Pakistan Investment Bonds (PIB) auction, which resulted in normalisation of the yield curve with a decline in yields, gave a good reason to investors to come back to the equity market.

“However, weakening oil fundamentals kept things in limbo as investors were undecided whether to book profit or take new positions,” it said. “Similar to Wednesday’s performance, the fertiliser sector maintained the momentum with further support from cement and exploration and production sectors.”

The banking sector, on the other hand, faced selling pressure, bearing the brunt of selling by foreign investors in the past couple of sessions.

The cement sector managed to make some recovery and maintained its top position in trading volumes with 34.6 million shares changing hands, followed by chemical producers (12.9 million) and vanaspati firms (10.9 million), the report said.

JS Global analyst Danish Ladhani said the market remained range bound, touching intra-day high and low of +205 and -226 points respectively and closed at 31,329 points, +0.3%.

“On the economic front, the foreign minister confirmed that the IMF had decided to give a one-year relief to Islamabad amid coronavirus pandemic,” he said. “Moreover, crude oil traded near 18-year lows.”

Oil and Gas Development Company (+1.6%), Pakistan Petroleum (+1.4%) and Engro (+0.2%) cumulatively contributed to positive close of the index.

Traded value stood relatively low at $28 million, down 36% and volumes came in at 119 million shares, down 36%.

“Going forward, we expect the market to trade sideways and one may see hectic activity due to the new results season but recommend investors to sell on strength,” the analyst said.

Overall, trading volumes decreased to 119.1 million shares compared with Wednesday’s tally of 185.6 million. The value of shares traded during the day was Rs4.8 billion.

Shares of 341 companies were traded. At the end of the day, 162 stocks closed higher, 160 declined and 19 remained unchanged.

Maple Leaf Cement was the volume leader with 14.8 million shares, gaining Rs0.34 to close at Rs23.42. It was followed by Unity Foods with 10.9 million shares, gaining Rs0.46 to close at Rs10.75 and Hascol Petroleum with 7.2 million shares, losing Rs0.22 to close at Rs14.24.

Foreign institutional investors were net sellers of Rs375.5 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.