Market watch: Stocks continue uptick ahead of likely rate cut

Benchmark index gains 104.30 points to settle at 37,804.61

KARACHI:

The stock market accumulated more gains on Wednesday, gradually extending the rally into the fifth day with the KSE-100 index rising over 100 points.

The index moved between intra-day high and low of 286 and 148 points respectively in a market where mainly day traders were involved in alternative bouts of buying and selling. However, they were unable to cross the volumes recorded the previous day.

Investors were biting their nails, awaiting the interest rate announcement, which was expected by the end of current month.

Market activity was driven by the investors cheering relative stability of the rupee coupled with news of declining Covid-19 cases and deaths.

Furthermore, the news of current account deficit – the difference between government’s foreign expenditure and income – contracting a massive 78% to $2.96 billion in the previous fiscal year strengthened investors’ sentiment.

Developments about the Naya Pakistan Housing Scheme spurred buying interest in cement stocks.

However, news of removal of Adviser to Prime Minister on Finance Dr Abdul Hafeez Sheikh as a member of the 10th National Finance Commission (NFC) dragged the index into the red, but bulls managed to take over control again.

There were some positive triggers that may have rejuvenated investors’ interest in equities. The Asian Infrastructure Investment Bank (AIIB) agreed to lend $250 million to Pakistan to help the country combat the challenges posed by the novel coronavirus.

At close, the benchmark KSE-100 index recorded an increase of 104.30 points, or 0.28%, to settle at 37,804.61 points.

Arif Habib Limited, in its report, stated that the market traded in a manner whereby fertiliser and banking sectors faced selling pressure and profit-booking, which was offset by index heavyweights Hubco and Engro. “However, MCB, HBL and cement stocks, particularly Lucky Cement, saved the day.”

The approval of funds by the Economic Coordination Committee (ECC) for the construction sector gave investors in cement stocks a reason to trade, the report added.

Moreover, international crude oil prices increased, which helped exploration and production stocks staged a recovery.

The cement sector topped the volumes with trading in 59.8 million shares, followed by oil and gas marketing companies (46.6 million) and technology firms (40.2 million).

Sectors contributing to the performance included cement (+79 points), automobile (+40 points), oil and gas marketing (+26 points), exploration and production (+20 points), power (-37 points), insurance (-15 points) and fertiliser (-2 points).

Stocks that contributed positively to the index were Lucky Cement (+71 points), Millat Tractors (+28 points), PSO (+18 points), MCB (+16 points) and HBL (+14 points).

Stocks that contributed negatively included Hubco (-35 points), UBL (-34 points), Engro (-16 points), TRG Pakistan (-11 points) and EFU General Insurance (-8 points).

JS Global analyst Maaz Mulla said the market remained range bound, touching intra-day high and low of +286 and -148 points respectively. It closed at 37,805, up 0.3%.

Traded value stood relatively low at $106 million, down 9% and volumes came in at 405 million shares, down 11%.

Major contribution to the total market volumes came from Unity Foods (+3.5%), Hascol Petroleum (+2.5%), Agritech Limited (+13%) and Fauji Cement (-0.7%), which cumulatively contributed 78 million shares, he added.

On the news front, the government on Tuesday raised Rs199.4 billion against the target of Rs140 billion through the auction of fixed rate Pakistan Investment Bonds (PIBs).

“Moving forward, we recommend investors to book profit and wait for a dip for fresh buying. Our top picks are oil marketing, steel and refinery stocks,” the analyst said.

Overall, trading volumes decreased to 405.5 million shares compared with Tuesday’s tally of 457.2 million. The value of shares traded during the day was Rs17.8 billion.

Shares of 409 companies were traded. At the end of the day, 185 stocks closed higher, 196 declined and 28 remained unchanged.

Hascol Petroleum was the volume leader with 21.2 million shares, gaining Rs0.35 to close at Rs14.08. It was followed by Unity Foods with 20.1 million shares, gaining Rs0.43 to close at Rs12.79 and Agritech Limited with 19.3 million shares, gaining Rs0.66 to close at Rs5.66.

Foreign institutional investors were net sellers of Rs587.7 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.