Earnings optimism drives PSX recovery

KARACHI:

Following Independence Day celebrations, the Pakistan Stock Exchange (PSX) registered a modest recovery on Thursday, gaining over 200 points on the back of a robust earnings outlook.

In the morning, the trading session got off to a lacklustre start at the intra-day low of 77,987.82 points. However, the KSE-100 index picked up momentum as the day progressed.

The bullish momentum was powered by multiple factors including high corporate payouts, rising global equities, a decrease in return on the National Savings Scheme (NSS) and likely approval of the International Monetary Fund's (IMF) Extended Fund Facility (EFF) later in August.

Consequently, the index crossed the 78,000 barrier with relative ease and reached its intra-day high of 78,709.13 points before midday. Fertiliser, exploration and production (E&P), IT and banking sectors were the key contributors to the market's positive performance.

Despite a gradual downtrend post-intra-day high, the market managed to close above the 78,000 mark with modest gains.

"Stocks showed recovery on a strong earnings outlook," commented Ahsan Mehanti, MD of Arif Habib Corp. "High corporate payouts, bullish global equities, a drop in NSS rates and likely approval of the Extended Fund Facility by the IMF board this month played the role of catalysts in bullish close at the PSX."

At the end of trading, the benchmark KSE-100 index recorded a modest increase of 228.56 points, or 0.29%, and settled at 78,105.98.

Topline Securities, in its report, noted that Pakistan's stock market increased 229 points, or 0.29%.

Fertiliser, E&P, IT and banking sectors saw a significant contribution from Fauji Fertiliser, Pakistan Oilfields, MCB Bank, Systems Limited and Meezan Bank, which together added 253 points to the index, Topline said.

Arif Habib Limited (AHL), in its report, said that gains above 78,000 took the KSE-100 to 78,700 points before it came down in the second half of the session.

Some 55 stocks rose whole 43 fell with Fauji Fertiliser (+2.99%), Pakistan Oilfields (+1.98%) and MCB Bank (+1.49%) being the biggest contributors to the index gains.

Lucky Cement (-2.34%), Oil and Gas Development Company (-1.19%) and Millat Tractors (-1.69%) were the largest drags.

"Key movers of the day were Citi Pharma (+5.74%), Pakistan Telecommunication Company (+10%) and Airlink Communication (+4.01%)," it said, adding that Ferozsons Laboratories (+10%) reported that its subsidiary, BF Biosciences Limited, had successfully launched a human insulin under the brand name Ferulin.

Heading into the last session of the week, the KSE-100 was so far down 0.56% week-on-week and "we continue to expect an upside from current levels towards 79,000," AHL said.

Overall trading volumes increased to 591.1 million shares compared with Tuesday's tally of 604.1 million. The value of shares traded during the day was Rs20.1 billion.

Shares of 442 companies were traded. Of these, 227 stocks closed higher, 162 fell and 53 remained unchanged.

Kohinoor Spinning was the volume leader with trading in 91.02 million shares, gaining Re1 to close at Rs9.32. It was followed by Yousuf Weaving Mills with 65.3 million shares, gaining Rs0.86 to close at Rs6.49 and WorldCall Telecom with 60.6 million shares, gaining Rs0.06 to close at Rs1.23.

Foreign investors were net sellers of shares worth Rs94.6 million, according to the NCCPL.