Market watch: Stocks rebound over likely low inflation

KSE-100 index rises 238.82 points to settle at 32,553.39

KARACHI: Optimism emerged at the bourse on Tuesday as the KSE-100 index posted an increase of 239 points on anticipation of a low inflation reading for April as well as expectations of further rate cut by the State Bank of Pakistan’s Monetary Policy Committee in May.

Oil prices plunged late on Monday with Brent crude trading below $20 a barrel and West Texas Intermediate (WTI) falling 25%, which impacted oil stocks at the Pakistan Stock Exchange as well.

The market remained range-bound for most part of the session due to absence of positive triggers for providing direction.

Earlier, trading began with a spike and the market kept rising in the early hours. Some of the gains were erased near midday trading, however, strong sentiment coupled with positive mood helped the market recoup losses.

At close, the benchmark KSE-100 index recorded an increase of 238.82 points, or 0.74%, to settle at 32,553.39.

Arif Habib Limited, in its report, said the market saw rebound in the cement sector as concerns over cement prices dissipated.

“Upcoming release of inflation data and possible rate cut helped investors take a positive view on equities,” it said. “International crude oil prices edged lower, with WTI slipping below $11 per barrel that kept pressure on exploration and production stocks.”

PSO, on the other hand, posted price gains during the session. Banking-sector stocks saw selling pressure due to rate cut expectations.

The cement sector maintained its top position in trading volumes with 59.6 million shares, followed by vanaspati firms (20.5 million) and banks (16.8 million), the report said.

JS Global analyst Danish Ladhani said the benchmark KSE-100 index closed on a positive note at 32,553, up 0.7%. “Overall, volumes remained dry with thin participation from investors due to Ramazan,” he said.

In the cement sector, Cherat Cement (+4.8%) announced 9MFY20 loss per share of Rs6.11 against earnings per share of Rs11.58 in the same period of last year with no cash payout.

Cement stocks kept the bourse alive during the session where good volume was seen in Maple Leaf Cement (+3%), DG Khan Cement (+4.1%) and Pioneer Cement (+5.3%).

Hubco (+3.2%) remained on the positive trajectory after it announced 9MFY20 consolidated earnings per share (EPS) of Rs14.07 against Rs7.16 last year with no cash dividend.

Pakistan Petroleum (-1%) and Pakistan Oilfields (-0.6%) in the exploration and production sector remained in the negative zone as international oil prices plummeted on concerns about dwindling global storage capacity.

Lucky Cement (+2.6%), Oil and Gas Development Company (+0.4%), Engro (+1.8%) and MCB (+0.2%) contributed to positive close of the index.

Traded value stood at $36 million, up 9% and volume came in at 159 million shares, up 30%.

“Going forward, we expect the market to remain under pressure and recommend investors to sell on strength,” the analyst said.

Overall, trading volumes increased to 159.4 million shares compared with Monday’s tally of 122.3 million. The value of shares traded during the day was Rs5.8 billion.

Shares of 325 companies were traded. At the end of the day, 174 stocks closed higher, 129 declined and 22 remained unchanged.

Maple Leaf Cement was the volume leader with 36.2 million shares, gaining Rs0.77 to close at Rs26.72. It was followed by Unity Foods with 20.6 million shares, gaining Rs0.39 to close at Rs11.33 and The Bank of Punjab with 7.9 million shares, losing Rs0.15 to close at Rs8.36.

Foreign institutional investors were net buyers of Rs33.6 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.