Market watch: Bulls continue to drive index higher

Benchmark index gains 319.72 points to settle at 37,650.57

KARACHI:

Bullish momentum prevailed at the Pakistan Stock Exchange on Monday as investors took cue from last week’s trend and pushed the index higher.

The benchmark KSE-100 index jumped from the moment trading began and continued to trade in the green for the entire session. Activity was driven by investors cheering the low interest rate environment coupled with a surge in foreign direct investment (FDI).

FDI rose 88% to $2.56 billion in Pakistan in the previous fiscal year (FY20) compared to $1.36 billion in FY19, the State Bank of Pakistan (SBP) reported on Friday.

Developments regarding the Diamer-Bhasha Dam and the housing scheme spurred buying interest in cement stocks. Additionally, the news of declining Covid-19 cases and deaths also boosted investor confidence.

At close, the benchmark KSE-100 index recorded an increase of 319.72 points, or 0.86%, to settle at 37,650.57 points.

According to a report of Arif Habib Limited, “the benchmark index hit yet another recent high with one of the highest volumes, courtesy cement and power sectors.”

“Last 10 days of the month has a scheduled meeting of the State Bank to decide the monetary policy stance with anticipation of further rate cut,” it added.

Sectors contributing to the performance included power (72 points), cement (47 points), exploration and production (27 points), textile (26 points) and engineering (24 points).

Stocks that contributed positively to the index were Hubco (56 points), Fauji Cement Company (24 points), TRG Pakistan (19 points), Kapco (15 points) and Lucky Cement (14 points).

Stocks that contributed negatively included Engro (12 points), Pakistan Tobacco (11 points), UBL (9 points), Habib Metropolitan Bank (8 points) and Nestle (7 points).

JS Global analyst Maaz Mulla said “bears were defeated in Monday’s session as the market remained in the green zone. The benchmark index opened positive and touched a high of 410 points as institutional participation was witnessed in main board stocks.”

The refinery sector continued its upward march, which began last week, where National Refinery (+7.5%), Attock Refinery (+7.3%) and Pakistan Refinery (+7.4%) were the major movers.

The steel sector also enjoyed a similar trend where International Industries (+7.5%), International Steels (+6.8%), Mughal Iron and Steel (+4.6%) and Amreli Steels (+0.8%) were in the green region.

Investor interest was also witnessed in the power sector where Kapco (+7.2%), Lalpir Power (+6.6%), Hubco (+3.4%) and Nishat Chunian Power (+2.8%) closed higher than the previous trading day.

“Moving forward, we recommend investors to book profit and wait for a dip for fresh buying. Our top picks are cement, steel and refinery stocks,” he added.

Overall, trading volumes rose to 553.8 million shares compared with Friday’s tally of 466.1 million. The value of shares traded during the day was Rs19.5 billion.

Shares of 414 companies were traded. At the end of the day, 269 stocks closed higher, 123 declined and 22 remained unchanged.

Hascol Petroleum was the volume leader with 32.5 million shares, losing Rs0.08 to close at Rs14. It was followed by TRG Pakistan with 27.6 million shares, gaining Rs1.83 to close at Rs39.25 and Maple Leaf Cement with 23 million shares, gaining Rs0.57 to close at Rs32.94.

Foreign institutional investors were net sellers of Rs295.8 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.