Market watch: KSE-100 gains on oil price rebound

Benchmark index rises 386.6 points to settle at 32,850.83

KARACHI: The stock market endured a range-bound session on Thursday and gained 387 points on the back of a rebound in global oil prices that erased some of the pessimism from the bourse.

During the session, crude oil prices rose in the international market, spurred by rising tensions in the Middle East, output cuts by producing nations to tackle oversupply and the promise of more government stimulus to ease the economic pain of the new coronavirus pandemic.

Investors at the Pakistan Stock Exchange cherished the rebound in oil market and made fresh investment in oil stocks, which led oil-related sectors to close in the green.

In addition to that, a host of financial results were announced during the day which highly influenced the direction of KSE-100 index.

Most stocks of the banking sector closed in the negative zone as the State Bank of Pakistan directed commercial banks on Wednesday to suspend dividend payments for the quarter ended March 31, 2020 and half year ending June 30, 2020, which triggered a sell-off.

A report of Moody’s rating agency surfaced during the session in which it predicted that Pakistan’s GDP would contract by 0.5% in FY20 as opposed to the International Monetary Fund (IMF)’s projection of 1.5% contraction.

The rating agency also predicted that Pakistan’s economy would grow by more than 2% in next fiscal year 2021. Both these revelations acted as positive triggers and strengthened investor sentiment at the bourse.

Earlier, trading began with a jump, however, by midday all gains were wiped out and the KSE-100 index was trading flat. In the second half of the session, the index saw renewed interest from investors and resumed its uptrend.

In the final hours, the upward drive accelerated and the index closed with significant gains. Nevertheless, the day was marked by range-bound trading.

At close, the benchmark KSE-100 index recorded an increase of 386.6 points, or 1.19%, to settle at 32,850.83.

Arif Habib Limited, in its report, stated that the market traded range bound for most of the session with cement, banking and engineering (steel) sectors facing selling pressure whereas oil and gas stocks trading in the green.

International crude prices rebounded overnight with the West Texas Intermediate (WTI) trading +15% and helped Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL) and Hascol Petroleum hit their upper circuits.

Sentiment in the banking sector turned negative due to SBP’s directive to banks to conserve capital by not declaring dividends.

The cement sector saw profit-booking amid poor financial results by some companies. It led the volumes with trading in 70.4 million shares, followed by oil and gas marketing companies (28.1 million) and banks (14.7 million), the report said.

JS Global analyst Danish Ladhani said some respite was seen at the bourse on the back of results season.

PPL (+7.4%) in the exploration and production sector closed at its upper circuit. The company announced consolidated 9MFY20 earnings per share (EPS) of Rs14.18 vs Rs16.18 in the same period of last year with no dividend.

OGDC (+7.3%) also closed higher as the oil market rallied on Gulf tensions and output cuts.

In the financial sector, Bank AL Habib (+0.7%) announced consolidated 1QCY20 EPS of Rs2.56 against Rs1.85 last year whereas UBL (+0.2%) announced consolidated 1QCY20 EPS of Rs3.98 against Rs3.94 last year with cash payout of Rs2.50 per share.

Profit-taking was witnessed in the cement sector where DG Khan Cement (-5.3%) announced consolidated 9MFY20 loss per share (LPS) of Rs4.22 against LPS of Rs2.29 last year whereas Attock Cement (+1%) announced consolidated 9MFY20 EPS of Rs8.12 against Rs10.01 last year with no cash payout.

Furthermore, Kohat Cement (-7.3%) announced consolidated 9MFY20 LPS of Rs1.41 against EPS of Rs10.81 last year with no dividend.

Engro (+2.2%), HBL (+0.04%), Hubco (+2.4%), OGDC (+7.3%), PPL (+7.4%) and UBL (+0.2%) were the index movers of the day.

“Going forward, we expect the market to remain volatile and recommend investors to sell on strength,” the analyst added.

Overall, trading volumes decreased to 204.4 million shares compared with Wednesday’s tally of 239.9 million. The value of shares traded during the day was Rs9.4 billion.

Shares of 333 companies were traded. At the end of the day, 160 stocks closed higher, 151 declined and 22 remained unchanged.

Maple Leaf Cement was the volume leader with 25.6 million shares, losing Rs1.27 to close at Rs26.72. It was followed by Hascol Petroleum with 22.5 million shares, gaining Rs1.04 to close at Rs14.93 and Fauji Cement with 12.2 million shares, losing Rs0.03 to close at Rs16.94.

Foreign institutional investors were net sellers of Rs337 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.