Market watch: Stocks edge up ahead of monetary policy announcement

Benchmark index rises 16.10 points to settle at 33,283.79

KARACHI: Some optimism emerged at the bourse on Monday as the KSE-100 index edged up 16 points ahead of the Morgan Stanley Capital International (MSCI) review due on May 12 and on expectation of further rate cut by the State Bank of Pakistan’s monetary policy committee this week.

The market remained volatile for most part of the session due to the absence of positive triggers that could provide a clear 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 investor sentiment coupled with positive mood helped the market recoup losses.

At close, the benchmark KSE-100 index recorded an increase of 16.10 points, or 0.05%, to settle at 33,283.79.

Arif Habib Limited, in its report, stated that the market traded in a narrow range between +48 points and -142 points, closing the session up by 16 points.

The banking sector traded in the negative zone and a similar activity was observed in cement and exploration and production sectors.

“All eyes are set on the MSCI rebalancing and monetary policy; MSCI is scheduled to announce its decision on May 12 whereas the State Bank of Pakistan (SBP) will announce the policy rate in the ongoing week,” it said.

Sideboard stocks were in the limelight and contributed to the trading volumes, including WorldCall Telecom, Hum Network, Unity Foods and TRG Pakistan.

Meanwhile, pharmaceutical stocks – Ferozsons Laboratories and The Searl Company –reacted to the possible engagement with Gilead for the manufacturing of coronavirus treatment drug Remdesivir and performed well on the bourse.

Stocks that contributed positively to the index included The Searl Company (+12 points), Sui Northern Gas Pipelines (+10 points), TRG Pakistan (+7 points), Adamjee Insurance (+6 points) and Glaxo (+6 points).

Stocks that contributed negatively were Hubco (-12 points), Pakistan Petroleum (-7 points), HBL (-4 points), PSO (-4 points) and OGDC (-4 points).

JS Global analyst Maaz Mulla said the market remained volatile throughout the day. “The dull activity can be attributed to the lack of triggers, which drove the market sideways,” he added.

“On the news front, the International Monetary Fund (IMF) has projected Pakistan’s gross financing needs at 51.2% of gross domestic product (GDP) in 2020,” Mulla stated.

Investors’ interest was witnessed in the pharma sector where Ferozsons Laboratories (+7.5%) hits its upper circuit and The Searl Company (+6.3%), AGP Limited (+4.3%) and Glaxo (+6.6%) closed higher than their previous day’s close.

“Moving forward, we expect the market to trade sideways as the consolidation phase continues. However, investors should take the opportunity to accumulate stocks as the medium to long-term trend remains bullish,” the analyst said.

Overall, trading volumes increased to 198.2 million shares compared with Friday’s tally of 88 million. The value of shares traded during the day was Rs4.4 billion.

Shares of 328 companies were traded. At the end of the day, 171 stocks closed higher, 128 declined and 29 remained unchanged.

WorldCall Telecom was the volume leader with 62.4 million shares, gaining Rs0.22 to close at Re1. It was followed by TRG Pakistan with 15.8 million shares, gaining Rs1.29 to close at Rs20.49 and Unity Foods with 15.1 million shares, gaining Rs0.36 to close at Rs13.15.

Foreign institutional investors were net sellers of Rs300.3 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.