Market watch: PSX shoots to over 2.5-year high

Benchmark KSE-100 index soars 502.99 points to settle at 45,153.42

KARACHI:

The stock market achieved a major milestone as the benchmark KSE-100 index surged over 500 points and powered past the 45,000-point barrier for the first time since May 2018.

The market was buoyed by strong investors’ interest, which lifted trading volumes to 664.5 million shares. Bulls reigned supreme and stock investors welcomed the government’s decision on partial settlement of circular debt with the independent power producers (IPPs).

The rise was also attributed to upbeat data of petroleum product sales which rose in double digits. Oil sales were up 16% to 1.59 million tons in December 2020 compared to 1.37 million tons in the same month of 2019.

Investor confidence also got a lift from the positive economic momentum observed in the first quarter of current fiscal year 2020-21. The State Bank of Pakistan’s (SBP) report “The State of Pakistan’s Economy” revealed that economic activities were largely restored to pre-Covid levels in the first quarter (July-September) of FY21.

The report projected a promising growth ahead in all major sectors including agriculture, industries and services.

In the morning, stock trading began with a spike and the uptrend continued for the rest of the day. At close, the benchmark KSE-100 index recorded an increase of 502.99 points, or 1.13%, to settle at 45,153.42 points.

Pakistan-Kuwait Investment Company Head of Research and Development Samiullah Tariq told The Express Tribune that market performance remained strong on the back of positive macroeconomic indicators.

“There are some reasons behind the cheerful performance at the stock exchange, which include improving economic indicators – low interest rate and surging liquidity,” he pointed out. “Secondly, positive industrial growth and earnings outlook lent support to the already rising stock index.”

The analyst added that the settlement reached between the government and IPPs also played the role of a catalyst in positive momentum of the market. Tariq projected that the market would continue to maintain its bullish momentum.

Speaking to The Express Tribune, BMA Capital Executive Director Saad Hashemy said, “The KSE-100 index closed above 45,000, which is for the first time under the PTI government.” The last time the index had closed above 45,000 was in May 2018, he added.

Positive sentiment dominated trading in the market, particularly in exploration and production, banking and sideboard stocks.

“The market remained attractive as it was trading at a deep discount of around 55-60% to the Morgan Stanley Capital International (MSCI) Emerging Markets compared to the historic average of around 30-35%,” the analyst added.

Arif Habib Limited, in its report, stated that the market added a solid 544 points during the session and closed in the green.

“Buying activity was observed across the board with exploration and production and oil and gas marketing companies rebounding strongly and supported by cement and fertiliser sectors, which had shown good progress in the previous session as well,” it said.

The performance of exploration and production stocks was mainly attributed to a significant increase in prices of oil in the international market on the conclusion of an agreement among OPEC+ member countries.

The report added that the cement sector leaped on expectation of increase in prices of cement in the northern region. The banking sector also contributed to the market’s advance as investors anticipated better annual results.

Overall, trading volumes soared to 664.5 million shares compared with Tuesday’s tally of 582.4 million. The value of shares traded during the day was Rs24.7 billion.

Shares of 417 companies were traded. At the end of the day, 232 stocks closed higher, 168 declined and 17 remained unchanged.

Byco Petroleum was the volume leader with 97.6 million shares, gaining Re1 to close at Rs9.79. It was followed by Pak Refinery with 87.3 million shares, gaining Rs1.12 to close at Rs25.52 and Kot Addu Power Company with 31.1 million shares, gaining Rs0.56 to close at Rs34.34.

Foreign institutional investors were net buyers of Rs220.9 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.