PSX buoyant over earnings, rate cut talk
A sign of the Pakistan Stock Exchange is seen on its building in Karachi, Pakistan January 11, 2016. PHOTO: REUTERS
Pakistan Stock Exchange (PSX) on Wednesday continued its bullish momentum as it extended gains from the previous session, buoyed by an earnings season rally coupled with expectations of a further reduction in policy rate.
The trading session commenced on a bullish note, where investors took keen interest in stocks of companies reporting positive earnings. Investor optimism prevailed throughout the session with minor ups and downs.
The bull-run was also powered by the talk of a potential rate cut by the State Bank of Pakistan (SBP) in its monetary policy meeting on July 29.
News of Prime Minister Shehbaz Sharif setting a target of $60 billion for annual exports in the next three years bolstered investor confidence, taking the KSE-100 index to the intra-day high of 79,704.36.
The bourse, after maintaining the bullish trend throughout the day, closed with gains of over 400 points.
“Stocks closed higher in an earnings season rally on expectations of SBP policy rate cut on July 29,” said Ahsan Mehanti, MD of Arif Habib Corp.
“PM’s resolve to push exports to $60 billion in the next three years along with hints of low-cost electricity and finance minister’s hopes of ratings upgrade by Moody’s due to government reforms and efforts to improve economic indicators played the role of catalysts in bullish close at the PSX.”
At the end of trading, the benchmark KSE-100 index recorded notable gains of 409.92 points, or 0.52%, and settled at 79,397.01.
Topline Securities, in its report, said that Pakistan’s stock market exhibited a positive momentum, with the index reaching a high of 79,704 points.
Key stocks such as Fauji Fertiliser Company, Meezan Bank, TRG Pakistan, Faysal Bank and Engro Fertilisers contributed positively as they collectively added 300 points to the index.
Conversely, United Bank, Hub Power and Dawood Hercules Corporation cast a negative impact, wiping off 110 points, Topline added.
Arif Habib Limited (AHL), in its report, commented that there was “more lift off Monday’s lows with the KSE-100 mustering gains of 0.52% day-on-day”.
Among corporate announcements, Honda Atlas Cars reported 1QMY25 earnings per share (EPS) of Rs1.42, up 40% year-on-year, attributed to better gross margins, which rose 1,020 basis points (bps). On a sequential basis, its earnings declined 85% quarter-on-quarter.
AHL said that TRG Pakistan gained the maximum on news that IBEX had announced the launch of Wave iX Translate, which would enable real-time translation in over 150 languages. “The fresh momentum has the potential to see TRG trade back towards its May high of Rs70.”
During the day, the largest index drags were Hub Power, United Bank and Dawood Hercules, AHL added.
Overall trading volumes increased to 386.98 million shares compared with Tuesday’s tally of 316.2 million. The value of shares traded during the day was Rs14.9 billion.
Shares of 430 companies were traded. Of these, 228 stocks closed higher, 155 fell and 47 remained unchanged.
Silkbank was the volume leader with trading in 36.9 million shares, gaining Rs0.1 to close at Rs1.10. It was followed by Hascol Petroleum with 25.8 million shares, gaining Rs0.61 to close at Rs6.69 and PIA Holding Company with 17.2 million shares, gaining Rs0.68 to close at Rs16.31.
Foreign investors were net sellers of shares worth Rs51.7 million, according to the NCCPL.