Market watch: Stocks rally on economic optimism

Benchmark KSE-100 index surges 439.27 points to settle at 44,339.95

KARACHI:

The Pakistan Stock Exchange extended its bull run on Monday, as the benchmark KSE-100 index surged 439 points and closed above the 44,000-point mark.

Encouraging data of foreign direct investment (FDI), which improved 12% in the first five months of current fiscal year coupled with textile exports that swelled 28.4% year-on-year in the same period, fuelled the bullish sentiment, driving investors to take fresh positions across the board.

Moreover, the State Bank of Pakistan’s (SBP) liquidity injection in the previous week strengthened the confidence of investors, who opted to cherry-pick the attractive stocks.

After kicking off trading on a positive note, the KSE-100 index registered a brief decline in the early hours owing to profit-taking. However, positive macroeconomic indicators sparked investor interest, helping the index to recoup the losses.

Later, the market remained bullish throughout the day and closed the session in the green zone.

At close, the benchmark KSE-100 index recorded an increase of 439.27 points, or 1%, to settle at 44,339.95.

A report of Arif Habib Limited stated that the KSE-100 index continued its bullish trend as investor confidence got a boost from the State Bank’s injection into the open market operation last week, creating stability in the market.

Profit-taking emerged in the first trading hour, however, after that the market stayed in the green zone throughout the day, it said.

A bullish trend was observed mainly in cement and steel sectors. In the technology sector, TRG Pakistan advanced to the north by hitting the circuit breaker as its board of directors decided to continue to work towards further maximising value and capital returns for the company and its shareholders.

TRG Pakistan requested TRG International (TRGI) to directly or indirectly provide value, benefit or liquidity to its shareholders, the report said.

It was decided to park TRG Pakistan’s portion of liquid assets in a separate wholly owned subsidiary of TRGI (Special Purpose Vehicle), which would time-to-time purchase shares of TRG from the stock market.

Moreover, it said, the stock market continued to trade sideways with hefty volumes in third-tier stocks.

Sectors contributing to the performance included cement (+101 points), technology and communication (+88 points), fertiliser (+58 points), commercial banks (+35 points) and exploration and production (+30 points).

JS Global analyst Muhammad Mubashir said that bulls made a comeback as the KSE-100 index touched an intra-day high of 44,485 points.

Traded volumes stood at 238 million shares where TRG Pakistan (+7.5%), WorldCall Telecom (+1.9%), Byco Petroleum (-3.4%), Silkbank (+18.3%) and Telecard Limited (+3.8%) together contributed 34% to the total volumes.

TRG Pakistan hit its upper circuit following announcement that TRGI was forming an SPV to purchase shares of TRG from the PSX over time to provide liquidity to the shareholders of TRG.

“Going forward, we expect to see range-bound activity in the coming sessions and recommend investors to view any downside as an opportunity to buy in cement and steel sectors,” the analyst said.

Overall trading volumes decreased to 238.5 million shares compared with Friday’s tally of 252.2 million. The value of shares traded during the day was Rs9.4 billion.

Shares of 343 companies were traded. At the end of the day, 248 stocks closed higher, 76 declined and 19 remained unchanged.

TRG Pakistan was the volume leader with 25.7 million shares, gaining Rs7.98 to close at Rs114.41. It was followed by WorldCall Telecom with 17.5 million shares, gaining Rs0.04 to close at Rs2.19 and Byco Petroleum with 13.9 million shares, losing Rs0.22 to close at Rs6.17.

Foreign institutional investors were net buyers of Rs399.05 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan