Market watch: Stocks bounce on upbeat economic data

Benchmark KSE-100 index gains 47.35 points to settle at 41,876.26

KARACHI:

The Pakistan Stock Exchange (PSX) bounced back on Wednesday from the past two days’ trend and closed on a positive note owing to improved signals on the economic front including a surplus in the current account.

After dropping for the past two sessions, the benchmark KSE-100 index seemed to have found its resistance level as it started moving upwards. The sudden movement towards north could mainly be attributed to an 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 for the second consecutive month with a positive balance of $297 million in August 2020. The revelation acted as a much-needed positive trigger and helped lift the market upwards.

Positive activity also emerged in the wake of recovery in cement stocks on the back of healthy cement sales during the ongoing month.

Earlier, trading began on a positive note, pushing the index up by 194 points, and it hit intraday high of 42,022 points.

Later, the market dipped significantly as weakening crude oil prices in the international market took a toll on exploration and production sector stocks, which wiped off most of the gains, but it still managed to close in the green.

At close, the benchmark KSE-100 index recorded an increase of 47.35 points, or 0.11%, to settle at 41,876.26 points.

Arif Habib Limited, in its report, stated that the market traded in a range of -73 points and +194 points. It closed the session slightly in the green.

The exploration and production sector retreated, particularly stocks of Oil and Gas Development Company and Pakistan Petroleum Limited, on the back of weak global crude oil prices.

However, the banking sector enjoyed renewed buying activity, especially in HBL and The Bank of Punjab, it said.

Among oil marketing companies, Pakistan State Oil and Hascol Petroleum performed better. The cement sector also showed positive activity in anticipation of healthy sales in the ongoing month, the report added.

The banking sector posted high volumes of 194.2 million shares, followed by vanaspati firms (51.8 million) and technology companies (47.1 million).

Individually, stocks that contributed positively to the index included Dawood Hercules (+23 points), Colgate Palmolive (+16 points), Interloop Limited (+13 points), Jubilee Life Insurance (+7 points) and The Bank of Punjab (+7 points).

Stocks that contributed negatively were Oil and Gas Development Company (-17 points), Pakistan Petroleum (-12 points), Lucky Cement (-11 points), Pakistan Oilfields (-8 points) and UBL (-8 points).

JS Global analyst Maaz Mulla said the benchmark KSE-100 index closed the trading session at 41,876, up 47 points, as overall range-bound activity was seen in the market.

Traded value stood at $77 million, down 1% and volumes came in at 583 million shares, up 32%.

From the exploration and production sector, Pakistan Petroleum (-0.8%), Pakistan Oilfields (-0.6%) and Oil and Gas Development Company (-1.1%) lost ground as crude oil prices slipped in the international market.

Steel and refinery sectors followed the same trend where Amreli Steels (-4.9%), Aisha Steel Mills (-2.8%), International Steels (-1.6%), Mughal Iron and Steel Industries (-1.4%), International Industries (-1.4%), National Refinery (-0.1%), Attock Refinery (-0.6%) and Byco Petroleum (-2.8%) were the major losers.

Mixed sentiment was witnessed in cement stocks among which Fauji Cement (+0.3%), Maple Leaf Cement (+0.3%) and DG Khan Cement (+1%) remained in the green zone and Lucky Cement (-0.6%), Cherat Cement (-0.6%), Attock Cement (-0.4%) and Power Cement (-0.1%) were in the red.

“Going forward, we expect the market to trade sideways due to absence of any immediate triggers ahead of the rollover week and recommend investors to sell on strength,” the analyst said.

Overall, trading volumes soared to 582.8 million shares compared with Tuesday’s tally of 441.3 million. The value of shares traded during the day was Rs12.9 billion.

Shares of 420 companies were traded. At the end of the day, 183 stocks closed higher, 218 declined and 19 remained unchanged.

Silkbank was the volume leader with 167.5 million shares, gaining Rs0.06 to close at Rs1.06. It was followed by Unity Foods with 51.8 million shares, gaining Rs0.06 to close at Rs18.01 and Jahangir Siddiqui & Co with 36.3 million shares, gaining Rs2.17 to close at Rs31.23.

Foreign institutional investors were net sellers of Rs28.56 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.