Market watch: Current account surplus lifts KSE-100 upwards

Benchmark index gains 181.01 points to settle at 39,802.6

KARACHI:

The Pakistan Stock Exchange bounced back on Monday owing to encouraging current account data, which helped remove the persistent selling pressure at the bourse.

According to the State Bank of Pakistan, the current account recorded a surplus once again with a positive balance of $424 million in July 2020. The revelation acted as the much-needed positive trigger and helped lift the market upwards.

Exploration and production stocks remained under selling pressure because of news of planned privatisation of Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL). A dip in global crude prices also enticed investors to offload oil stocks.

Earlier, trading got off to a positive start, however, the index succumbed to selling pressure within initial hours and was in the negative zone by noon. At that point, investors took cue from the surprising current account balance and strong sentiment supported the KSE-100 index in posting gains.

At close, the benchmark KSE-100 index recorded an increase of 181.01 points, or 0.46%, to settle at 39,802.6 points.

Arif Habib Limited, in its report, stated that the market opened on a positive note and continued the momentum by adding a total of 203 points during the session.

The index also registered a drop of 148 points from the previous trading session but rebounded by the end of the day and closed up by 181 points.

Cement, pharmaceutical, steel and oil and gas marketing sectors helped the index post gains. Among these, cement and pharmaceutical stocks reacted to expectations of an increase in product prices.

Cement sales were also anticipated to be high on the back of increased Public Sector Development Programme (PSDP) activity in the first quarter of FY21.

The exploration and production sector remained under pressure following news of planned privatisation of OGDC and PPL by the government, whereas banking sector stocks followed the trend of past several sessions.

The technology sector led the volumes with trading in 67 million shares, followed by cement firms (61.9 million) and miscellaneous companies (29.7 million), the report said.

JS Global analyst Danish Ladhani said the benchmark KSE-100 index closed in the positive territory at 39,802 levels, up 181 points. “The market remained range bound, touching a high and low of +203 and -148 points respectively,” he said.

In the exploration and production sector, OGDC (-1.6%), Pakistan Oilfields (-1.6%) and PPL (-1.4%) remained in the red zone as global oil prices inched lower amid concern over fuel demand recovery.

Furthermore, activity was seen in the cement sector where Lucky Cement (+2.2%), DG Khan Cement (+1.3%), Cherat Cement (+0.8%) and Pioneer Cement (+1%) were in the green on anticipation of strong sales figures.

Lucky Cement (+2.2%), TRG Pakistan (+7.2%), Dawood Hercules (+3%), Searle (+4.5%), NBP (+4%) and PSO (+1.4%) were the major movers on the day.

GlaxoSmithKline (+4.8%) announced its 1HCY20 earnings per share (EPS) of Rs3.90 versus Rs2.75 in the same period of last year with no cash payout.

Adamjee Insurance (+5.4%) announced consolidated 1HCY20 EPS of Rs2.57 versus Rs1.51 in the same period of last year with cash payout of Rs1.25 per share.

Traded value stood at $89 million, up 9% and volumes came in at 372 million shares, down 7%.

“Going forward, we expect the market to remain range bound during the rollover week with possible intraday corrections and recommend investors to sell on strength,” the analyst said.

Overall, trading volumes fell to 371.7 million shares compared with Friday’s tally of 400.5 million. The value of shares traded during the day was Rs14.9 billion.

Shares of 388 companies were traded. At the end of the day, 229 stocks closed higher, 135 declined and 24 remained unchanged.

TRG Pakistan was the volume leader with 29.9 million shares, gaining Rs3.64 to close at Rs54.46. It was followed by Dewan Cement with 23.5 million shares, gaining Re1 to close at Rs11.02 and Pace (Pak) with 23.5 million shares, gaining Rs0.33 to close at Rs3.53.

Foreign institutional investors were net sellers of Rs26.9 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.