Market watch: KSE-100 rallies on budget optimism

Benchmark index soars 421.36 points to settle at 48,726.08

KARACHI:

Bullish activity dominated trading at the Pakistan Stock Exchange (PSX) on Monday as widespread uncertainty, which enveloped the market before budget announcement, vanished gradually and a clear economic picture emerged.

The movement of benchmark KSE-100 index displayed a much stable upward march, which reflected the confidence gained by investors after Finance Minister Shaukat Tarin unveiled the federal budget on Friday.

Investor optimism about the budget was reflected at the bourse as market players took fresh positions on the back of tax incentives coupled with relief for various sectors.

Moreover, the reduction in capital gains tax (CGT) on sales of shares at the bourse in the federal budget for the upcoming fiscal year 2021-22 added to the upbeat investment climate.

Also fuelling the bullish sentiment was the encouraging large-scale manufacturing (LSM) output data, which showed a robust growth of 12.84% in the first 10 months of current fiscal year.

At close, the benchmark KSE-100 index recorded an increase of 421.36 points, or 0.87%, to settle at 48,726.08.

Arif Habib Limited, in its report, stated that the market opened on a positive note following the budget announcement on Friday.

“Dividend anticipation from state-owned enterprises helped propel Oil and Gas Development Company to its upper circuit (with a hefty dividend payout expectation), followed by positive price performance of Pakistan Petroleum,” the report said.

Similarly, positive budget measures for footwear, tyre, refinery, steel and cement sectors supported the listed companies of these sectors, which fared well during the session.

The market touched a high of 677 points after the pre-opening session, after which profit-booking brought the index down by around 400 points. However, buying momentum continued, which enabled the KSE-100 index to close in the green.

Sectors contributing to the performance included exploration and production (+202 points), cement (+92 points), engineering (+52 points), banks (+42 points) and oil and gas marketing companies (+32 points).

Individually, stocks that contributed positively to the index included Oil and Gas Development Company (+106 points), Pakistan Petroleum (+68 points), Systems Limited (+44 points), International Industries (+27 points) and Pakistan Oilfields (+25 points).

Stocks that contributed negatively were TRG Pakistan (-61 points), Fauji Fertiliser (-27 points), Unity Foods (-17 points), Fauji Fertiliser Bin Qasim (-13 points) and National Refinery (-10 points).

JS Global analyst Maaz Mulla said that a post-budget rally was witnessed at the PSX where the KSE-100 index touched intra-day high of +677 points before closing at 48,726, up 0.9%.

Total traded volume was recorded at 1.2 billion shares where major contribution came from Byco Petroleum (+8.5%), WorldCall Telecom (+0.2%), Hum Network (+0.7%), Aisha Steel Mills (+6.5%) and AGL Energy (-6.6%).

In the exploration and production sector, Oil and Gas Development Company (+7.5%), Pakistan Petroleum (+4.8%) and Mari Petroleum (+0.3%) gained ground on the back of a substantially higher dividend target set by the government for these companies, he added.

The analyst stated that in the auto sector, Pak Suzuki Motor Company (+7.5%) moved higher to close at its upper circuit following the government’s decision to reduce GST on locally assembled cars up to 850cc to 12.5% from 17% in the budget for 2021-22, while also exempting the federal excise duty (FED).

Moreover, Attock Refinery (+4.6%) and Pakistan Refinery (+4.4%) rose on significant developments for the refinery sector in the federal budget.

“Going forward, with volatility expected in coming days, we recommend investors to view any downside as a buying opportunity in construction-related sectors,” the analyst said.

Overall trading volumes rose to 1.2 billion shares compared with Friday’s tally of 1.02 billion. The value of shares traded during the day was Rs42.9 billion.

Shares of 413 companies were traded. At the end of the day, 238 stocks closed higher, 161 declined and 14 remained unchanged.

Byco Petroleum was the volume leader with 109.2 million shares, gaining Re1 to close at Rs12.83. It was followed by Hum Network with 108.4 million shares, gaining Rs0.06 to close at Rs8.68 and WorldCall Telecom with 98 million shares, gaining Rs0.01 to close at Rs4.23.

Foreign institutional investors were net sellers of Rs149.9 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.