Market watch: MSCI reclassification lifts stock market

Benchmark KSE-100 index rises 296.76 points to settle at 45,369.14

KARACHI:

The stock market turned bullish on Wednesday with an advance of nearly 300 points as the reclassification of Pakistan to the Frontier Markets Index of Morgan Stanley Capital International (MSCI) revived investor interest.

Robust export numbers for November 2021 fuelled buying momentum at the stock market. Earlier during the session, Adviser to Prime Minister on Commerce Abdul Razak Dawood announced that shipments from Pakistan to overseas markets fetched $2.9 billion in the past month.

Slight recovery of the rupee against the greenback aided the uptrend but the spike in inflation reading for November capped gains. Consumer Price Index (CPI) for the previous month entered into double digits and reached 11.5% compared to the same month of last year.

The benchmark KSE-100 index spiked as soon as trading began, however, volatility erased some of the gains by noon. At that point, encouraging export numbers enticed investors, triggering a buying spree, which helped accelerate the gains.

At close, the benchmark KSE-100 index recorded an increase of 296.76 points, or 0.66%, to settle at 45,369.14.

A report of Arif Habib Limited stated that the KSE-100 index stayed in green zone throughout the day as the market celebrated its transition from emerging to frontier markets.

The index opened with bullish momentum as traders took aggressive bets on cement, steel and technology stocks, it said.

Later, stock accumulation was witnessed in the banking sector after the CPI for November 2021 came in at 11.53% year-on-year (+3% month-on-month), the highest inflation in 21 months influenced by a record hike in fuel prices.

In the last trading hour, a sharp upside was witnessed as short sellers jumped in to square off trading positions, the report said.

JS Global analyst Muhammad Mubashir said that the benchmark KSE-100 index started the month on a good note.

“Investor interest was seen in blue-chip stocks, which were trading at deep discounts,” he said. “The KSE-100 index touched a high of 45,460 and closed at 45,369, up 297 points.”

Traded volumes stood at 241 million shares with Fauji Foods (+0.4%), TPL Properties (+1.5%), Maple Leaf Cement (+1.8%), TRG Pakistan (+1.4%), and WorldCall Telecom (+3.3%) being the highest contributors.

On the economic front, the CPI recorded an increase of 11.53% on a year-on-year basis in November 2021.

“Going forward, we recommend investors to adopt buy-on-dip strategy in bank, fertiliser and cement sectors,” the analyst said.

Overall trading volumes fell to 241.1 million shares compared with Tuesday’s tally of 411.5 million. The value of shares traded during the day was Rs9.2 billion.

Shares of 337 companies were traded. At the end of the day, 209 stocks closed higher, 108 declined and 20 remained unchanged.

Fauji Foods was the volume leader with 38.3 million shares, gaining Rs0.04 to close at Rs11.02. It was followed by Fauji Foods (R) with 37.1 million shares, losing Rs0.05 to close at Rs0.69 and TPL Properties XB with 14.9 million shares, gaining Rs0.66 to close at Rs43.48.

Foreign institutional investors were net sellers of Rs268.4 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.