Market watch: Stocks rally on cherry-picking by investors

Benchmark KSE-100 index adds 378.91 points to settle at 46,489.41

KARACHI:

The Pakistan Stock Exchange on Friday bounced back on the back of a decent rally as investors opted to cherry-pick stocks that had dropped to attractive valuations in the wake of recent bear run.

Bulls were seen dominating the market throughout the day mainly due to renewed hopes for successful completion of talks between Pakistan and the International Monetary Fund (IMF) for the release of next loan tranche.

Strong year-on-year growth in large-scale manufacturing (LSM) industries in the first quarter (July-September) of current fiscal year provided a sigh of relief to the sceptical investors ahead of the monetary policy announcement later on Friday.

Earlier, trading started on a sombre note as the KSE-100 index fell briefly but cherry-picking of stocks by investors in the first half of the session drove the market upwards.

Selling pressure emerged in the second half, however, strong investor sentiment helped the index register modest gains and close the week in the green.

At close, the benchmark KSE-100 index recorded an increase of 378.91 points, or 0.82%, to settle at 46,489.41.

A report of Arif Habib Limited stated that the market mostly stayed in the green zone, mainly led by the banking sector.

In the first half, positive momentum was observed as investors were optimistic due to the LSM industries’ output growth that increased 5.15% in the first quarter of current fiscal year 2021-22 compared to the same period of previous year, as almost all major manufacturing sectors posted growth.

In the second half, profit-booking was noted across the board after the current account deficit number that came in at $1.7 billion for October. The primary reason behind the deficit was a 66% year-on-year increase in imports to $6.8 billion in the month, the report said.

On the institutional front, stock accumulation was witnessed in the banking sector.

“Moving forward, the monetary policy committee decision to raise the policy rate by 150 basis points to 8.75% will create volatility in the upcoming rollover week,” it said.

Sectors contributing to the performance included banks (179 points), fertiliser (102 points), exploration and production (68 points) and cement (62 points).

JS Global analyst Waqar Iqbal said that the KSE-100 index remained in the positive territory due to market consensus on an increase in interest rate by 100 basis points and investor interest mostly inclined towards the banking sector.

“The market will witness rollover week starting Monday,” he pointed out. “Going forward, we believe participants will continue to await clarity about the IMF programme,” he added.

Overall trading volumes climbed to 304.2 million shares compared with Thursday’s tally of 263.6 million. The value of shares traded during the day was Rs11.99 billion.

Shares of 356 companies were traded. At the end of the day, 215 stocks closed higher, 123 declined and 18 remained unchanged.

Ghani Global Holdings was the volume leader with 33.9 million shares, gaining Rs0.45 to close at Rs33.68. It was followed by Service Fabrics with 17.9 million shares, gaining Rs0.06 to close at Rs12.93 and First National Equities with 14.9 million shares, gaining Re1 to close at Rs11.23.

Foreign institutional investors were net sellers of Rs2.12 billion worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.