Market watch: Stocks advance over rise in global crude prices

Benchmark index gains 399.15 points to settle at 34,749.57

KARACHI: The Pakistan Stock Exchange (PSX) on Monday staged a modest rally as increase in international crude oil prices combined with a recovery in regional markets triggered stock buying at the local bourse, which pushed the KSE-100 index up by nearly 400 points.

During the day, Brent crude price rose 1.2% to $42.79 per barrel while the US West Texas Intermediate (WTI) crude rose 0.7% to $39.82 a barrel after major producers agreed to extend a deal on record output cuts to the end of July.

Investors took cue from the rise and made fresh investment in oil stocks, which lent support to the benchmark index.

Also fuelling the rally were Asian shares that advanced to near three-month highs on hopes of a quicker global economic revival after weeks of lockdowns aimed at controlling the spread of coronavirus pandemic.

The MSCI’s broadest gauge of Asia-Pacific shares outside Japan rose 0.23%, extending gains for an eighth straight day. The index has surged 34% from four-year lows struck in mid-March when the world was grappling with the pandemic.

Widespread positivity was prevalent throughout the session as investors pinned hopes on a business-friendly budget that would be announced towards the end of current week.

Renewed interest in oil stocks caused trading to begin with a sharp spike and the uptrend persisted for the rest of the day. Investors cherry-picked stocks on anticipation of a business-friendly budget, helping the index powered past the 34,700-point mark.

At close, the benchmark KSE-100 index recorded an increase of 399.15 points, or 1.16%, to settle at 34,749.57.

Arif Habib Limited, in its report, stated that international crude prices helped prop up the stock market that gained 419 points during the day and closed near the intra-day high levels.

Exploration and production and oil marketing companies’ stocks realised price gains. The cement sector also performed well.

“Expectation of a reduction in duties and taxes on raw material created some excitement among the otherwise cautious investors, resulting in increased volumes in cement, steel and pharmaceutical sectors,” the report said.

The banking sector also performed well, courtesy HBL, UBL and MCB, and helped the benchmark index post decent gains.

Technology stocks posted the highest trading volumes of 38.1 million shares, followed by cement companies (32.7 million) and oil and gas marketing firms (15.9 million).

Among individual stocks, TRG Pakistan topped the index with trading in 19.5 million shares, followed by Pakistan Refinery (18.8 million) and Hascol Petroleum (13.1 million), said the report.

JS Global analyst Danish Ladhani said the benchmark KSE-100 index closed on a bullish note, gaining 399 points, or 1.2%, to close at 34,749. “The market remained positive as a pre-budget rally was witnessed,” he said.

Exploration and production, financial and cement sectors were the major movers of the index. Oil and Gas Development Company (+1.9%), Pakistan Petroleum (+2.5%) and Pakistan Oilfields (+5.2%) remained in the green zone as crude oil climbed in the international market after major producers agreed to extend the deal on record output cuts to the end of July.

Moreover, in the financial sector, MCB (+3.6%) and HBL (+1.1%) were in the positive territory. Lucky Cement (+1.4%) in the cement sector moved up.

Oil and Gas Development Company (+1.9%), HBL (+1.1%), MCB (+3.6%), Pakistan Petroleum (+2.5%), Lucky Cement (+1.4%), UBL (+3.2%), Pakistan Oilfields (+5.2%) and Engro Fertilisers (+1.2%) were the index movers.

Traded value stood high at $53 million, up 119% and volumes came in at 222 million shares, up 150%.

“Going forward, we expect the market to remain positive ahead of the budget announcement and recommend investors to sell on strength,” the analyst said.

Overall, trading volumes soared to 222.4 million shares compared with Friday’s tally of 89.1 million. The value of shares traded during the day was Rs8.7 billion.

Shares of 355 companies were traded. At the end of the day, 232 stocks closed higher, 106 declined and 17 remained unchanged.

TRG Pakistan was the volume leader with 19.5 million shares, gaining Rs1.32 to close at Rs28.58. It was followed by Pakistan Refinery (R) with 18.9 million shares, losing Rs0.46 to close at Rs2.97 and Hascol Petroleum with 13.2 million shares, gaining Rs0.42 to close at Rs14.77.

Foreign institutional investors were net sellers of Rs270.8 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.