Market watch: Cement sector leads stock market rally

Benchmark KSE-100 index soars 584.47 points to settle at 41,850.47

KARACHI:

Investors got on the front foot in the stock market on Monday as uncertainty surrounding the Financial Action Task Force’s decision on Pakistan’s fate faded away.

FATF on Friday gave yet another lifeline to Pakistan and decided to keep the country in its grey list for four more months.

The stock market followed an upward trajectory from the word go. Selective buying of different stocks, especially in oil and gas marketing, power and cement sectors, helped the market maintain the momentum that allowed the benchmark KSE-100 index to rise nearly 600 points.

Bulls ruled the bourse as quarterly financial results trickled in, which boosted investors’ confidence. Moreover, rupee’s recovery and upbeat economic data lent further support.

At close, the benchmark KSE-100 index recorded an increase of 584.47 points, or 1.42%, to settle at 41,850.47 points.

Arif Habib Limited, in its report, stated that the market opened on a positive note and the momentum, built at the end of last week, continued with complete disregard to political uncertainty.

The market kick-started the rollover week after Pakistan managed to maintain the status quo and remained on the FATF grey list.

“Being a short week due to a scheduled off on Friday and because of an ongoing rally on the back of growth in corporate earnings, the main board (with the exception of banking sector stocks) contributed positively to the index,” the report added.

The cement sector saw boisterous trading on the back of financial results of Lucky Cement early in the morning as well as increase in cement prices in the southern region.

Among oil and gas marketing companies, Pakistan State Oil spiked back to recent highs in the wake of expectations of better earnings scheduled to be announced on Tuesday.

Sectors contributing to the performance included cement (+236 points), technology (+53 points), oil and gas marketing companies (+44 points), power (+39 points) and investment banks (+37 points).

Individually, major gainers included Lucky Cement (+129 points), Dawood Hercules (+37 points), Hubco (+36 points), Millat Tractors (+29 points) and Systems Limited (+27 points).

Stocks that contributed negatively were UBL (-30 points), MCB (-11 points), Pakistan Oilfields (-5 points), Nestle Pakistan (-4 points) and HBL (-3 points).

JS Global analyst Danish Ladhani said the benchmark KSE-100 index closed on a bullish note, gaining 584 points after touching intraday high of +610 points.

“The market remained positive post-FATF meeting outcome where it was decided that the country would stay on the grey list until February 2021 on the back of successfully complying with 21 out of 27 action points,” he said.

Lucky Cement (+6.2%) in the cement sector reported consolidated 1Q20 earnings per share (EPS) of Rs13.45 versus Rs3.93 in the same period of last year. Moreover, Cherat Cement (+5%), Kohat Cement (+7.4%) and Fauji Cement (+7.5%) closed at their respective upper circuit.

“NetSol Technologies (+7.5%) in the technology sector closed at the upper circuit whereas Avanceon (+7.4%) soared as export remittances from IT and IT-enabled services, comprising computer services and call centres, surged 43.55% in the first three months (Jul-Sept) of current fiscal year,” he added.

Furthermore, UBL (-2.2%) in the financial sector announced 9MCY20 consolidated EPS of Rs12.81 versus Rs12.82 in the same period of last year.

“Going forward, we expect the market to remain volatile due to the rollover week and FATF decision,” the analyst said, adding, “We recommend investors to book profit at higher levels.”

Overall, trading volumes rose to 487.2 million shares compared with Friday’s tally of 354.4 million. The value of shares traded during the day was Rs21.5 billion.

Shares of 430 companies were traded. At the end of the day, 307 stocks closed higher, 105 declined and 18 remained unchanged.

Maple Leaf Cement was the volume leader with 48.5 million shares, gaining Rs1.74 to close at Rs43.92. It was followed by Power Cement with 38.3 million shares, gaining Rs0.80 to close at Rs10.34 and Fauji Cement with 31.2 million shares, gaining Rs1.55 to close at Rs22.34.

Foreign institutional investors were net sellers of Rs934.8 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.