Market watch: Stocks rise as investors cheer lower inflation

Benchmark KSE-100 index advances 457.59 points to settle at 41,834.85

KARACHI:

Despite a tumultuous session, the benchmark KSE-100 index maintained its uptrend for the third consecutive session and gained around 450 points, powered by an encouraging inflation data for August.

The Consumer Price Index (CPI) eased to 8.2% in August – the lowest in three months, according to the Pakistan Bureau of Statistics (PBS), which raised hopes for a policy rate cut in the monetary policy scheduled to be announced later this month.

News about Pakistan Stock Exchange (PSX) winning back the title of best Asian market and being the fourth best-performing market across the world in 2020, according to a New York-based global financial markets research firm, was taken positively by market participants and supported the uptrend.

A rise in international crude oil prices and strengthening rupee against the US dollar lent further support to the already bullish market.

Earlier, the trading session kicked off with a spike and the index climbed nearly 300 points in the first hour. The index kept swinging between the red and green zones throughout the session.

At close, the benchmark KSE-100 index recorded an increase of 457.59 points, or 1.11%, to settle at 41,834.85 points.

Arif Habib Limited, in its report, stated that the market continued its bull-run and gained a total of 556 points during the session. “A brisk trading activity was witnessed, during which National Bank of Pakistan (NBP) traded at its upper circuit after posting better-than-expected financial results at the opening bell,” the report said.

Stocks of cement, fertiliser, oil marketing and chemical sectors fared well with high trading volumes. Overall, the volumes hit a recent high of 836 million shares, the report added.

The technology sector led the volumes with trading in 114.5 million shares, followed by cement companies (86.9 million) and banks (81.3 million).

Individually stocks that contributed positively to the index included Engro (+38 points), UBL (+34 points), NBP (+31 points), Dawood Hercules (+28 points) and Engro Fertilisers (+26 points).

Stocks that contributed negatively were Hubco (-13 points), Shifa International Hospitals (-4 points), Meezan Bank (-3 points), FrieslandCampina Engro Pakistan (-3 points) and Highnoon Laboratories (-2 points).

JS Global analyst Maaz Mulla said the market was up and running and closed in the green zone for the third consecutive day. The benchmark index touched intraday high of +555 points and closed at 41,835, up 457 points.

Traded value stood higher at $158 million, up 21% and volumes came in at 837 million shares, up 10%.

“On the news front, the CPI eased for the month of August, standing at 8.2% (down from 9.3% in July) on the back of a slight decline in prices of essential food products,” he stated.

The cement sector continued its upward march where Kohat Cement (+2%), Cherat Cement (+2.3%), Pioneer Cement (+2.1%), Maple Leaf Cement (+1.3%) and DG Khan Cement (+1.1%) were the major movers.

“The banking sector also enjoyed the rally where NBP (+7.5%), UBL (+2.5%), Bank Alfalah (+1.8%) and HBL (+0.5%) closed in the green zone,” he said, adding “NBP declared its 1HCY20 result, where the company posted earnings per share of Rs7.08 with no cash payout.”

“Going forward, we expect the market to depict a similar trend and recommend investors to see any downside as an opportunity to buy stocks of cement, steel, consumer and banking sectors,” the analyst said.

Overall, trading volumes surged to 837 million shares compared with Tuesday’s tally of 759.4 million. The value of shares traded during the day was Rs26.2 billion.

Shares of 425 companies were traded. At the end of the day, 281 stocks closed higher, 130 declined and 14 remained unchanged.

K-Electric was the volume leader with 54 million shares, gaining Rs0.23 to close at Rs4.30. It was followed by PTCL with 48.7 million shares, gaining Rs0.88 to close at Rs10.54 and Pakistan International Bulk Terminal with 46.9 million shares, gaining Rs0.49 to close at Rs12.84.

Foreign institutional investors were net sellers of Rs493 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.