Market watch: Stocks surge in remarkable comeback
Rifts still exist in the market, however, they are being resolved slowly and gradually, Schehzad said. PHOTO: FILE
The stock market staged a remarkable rally on Tuesday as it soared over 1,300 points on the back of encouraging inflation reading.
The Consumer Price Index (CPI) came in at 8.91% for October 2020, which was far below market expectations as it had anticipated a significantly higher number because of a hike in prices of utilities.
A recovery in international equity markets, with major Asian stock markets reporting at least 1% jump, helped the benchmark KSE-100 index snap a four-session losing streak and close with handsome gains.
Global oil prices recorded an uptick as well, which pushed domestic investors to invest in oil sector stocks.
Earlier, trading kicked off with a spike and the market remained on an uptrend for the rest of the session. The rise accelerated towards the close of trading, which inflated the gains. The market surge helped pare the losses endured by the KSE-100 index a day ago.
At close, the benchmark KSE-100 index recorded an increase of 1,368.70 points, or 3.5%, to settle at 40,480.88 points.
Speaking to The Express Tribune, Next Capital Managing Director Muzammil Aslam termed inflation reading the prime reason behind the rally. He added that international equity markets had also recovered, which lent support to the Pakistan Stock Exchange.
“After falling continuously for the past few sessions, the international oil prices recovered on Tuesday, helping the domestic oil sectors to attract substantial investment,” he said.
Moreover, positive news flow from cement and textile sectors also powered the rally. Aslam pointed out that the textile sector received a record high export orders owing to the deteriorating Covid-19 situation in regional countries.
On the other hand, the cement sector reported historic high sales, which aided bullish sentiment.
Alpha Beta Core CEO Khurram Schehzad pointed out that the impact of uptick in international equity markets was being felt at the Pakistan bourse.
Still, selling pressure existed in the market but it would ease slowly and gradually, he said. However, according to him, uncertainty would mount over the next few days due to rising domestic and global Covid-19 cases.
He expected the market to stay volatile until the situation improved on the Covid-19 front and the number of new infections dropped substantially.
Arif Habib Limited, in its report, stated that the market rebounded with the addition of 1,400 points during the trading session and closed near the day’s high at +1,369 points.
Increase in international crude oil prices overnight as well as a positive trend in global stock markets - in the wake of US elections – helped the Pakistan bourse stage a comeback, it said.
Besides, Prime Minister Imran Khan’s announcement of lowering the cost of electricity for industrial consumers, which came by the end of trading, also provided support for the index.
The banking sector, which had been under significant selling pressure over the past few sessions, saw buyers take charge from sellers, clearing the way for stock prices to trade near their upper circuits, it said.
Overall, trading volumes rose to 384 million shares compared with Monday’s tally of 322.3 million. The value of shares traded during the day was Rs13.8 billion.
Shares of 402 companies were traded. At the end of the day, 344 stocks closed higher, 51 declined and seven remained unchanged.
Unity Foods was the volume leader with 42.9 million shares, gaining Rs0.87 to close at Rs24.14. It was followed by Power Cement with 35.7 million shares, gaining Rs0.93 to close at Rs10.21 and Hascol Petroleum with 29.5 million shares, gaining Rs1.01 to close at Rs14.83.
Foreign institutional investors were net sellers of Rs600.3 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.