Fresh value hunting propels stocks higher

KSE-100 index gains 983 points on hopes of robust results, rate cut

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KARACHI:

Pakistan Stock Exchange (PSX) entered the new week on Monday with fresh optimism as investors showed increased interest in attractive shares, driving the KSE-100 index higher by nearly 1,000 points.

The robust performance was also fuelled by Finance Minister Muhammad Aurangzeb's assertion in an interview to Bloomberg that the government remained optimistic about meeting the International Monetary Fund's (IMF) loan terms.

On the sidelines of Asian Financial Forum in Hong Kong, he said the government was very keen to float Panda bonds in the Chinese capital markets.

After a positive start, the index dipped to the intra-day low of 113,083.86 points in the first hour. However, investor sentiment turned positive very quickly, which sparked a wave of buying and gradually propelled the KSE-100 to the intra-day peak of 114,496.09 before the close of trading.

Arif Habib Corp MD Ahsan Mehanti wrote, "Stocks closed higher, led by second and third-tier shares, amid speculation surrounding the earnings season and progress in ongoing talks between the government and Pakistan Tehreek-e-Insaf (PTI).

Surging global crude oil prices and an anticipated cut in the State Bank's policy rate later this month were among the major catalysts for bullish close at the PSX, he added. At the end of trading, the benchmark KSE-100 index posted a surge of 982.77 points, or 0.87%, and settled at 114,230.06.

JS Global analyst Muhammad Hasan Ather commented that the rally at the PSX was driven by strong buying in key sectors including automobile assemblers, cement and oil & gas exploration companies.

WorldCall Telecom, Cnergyico PK, Sui Southern Gas Company, Fauji Foods and K-Electric recorded the highest trading volumes. Investors remained optimistic ahead of the upcoming corporate results season and the anticipated 100-basis-point rate cut by the monetary policy committee, he said. He expected that a positive outlook for bank payouts would further boost investor sentiment in the near term.

Arif Habib Limited (AHL) wrote in its review that at the beginning of the week, the KSE-100 index pushed through 114k.

Some 70 shares rose while 26 fell with Mari Petroleum (+3.66%), Millat Tractors (+5.57%) and United Bank (+1.61%) contributing the most to index gains. Engro Holdings (-10%), Bank Alfalah (-1.37%) and Pakgen Power (-4.1%) were the biggest drags, it said.

AHL mentioned that Finance Minister Muhammad Aurangzeb in a Bloomberg interview said that Pakistan was preparing to debut yuan-denominated bonds this year to shore up finances. He also remained optimistic about meeting the IMF's loan programme terms.

Pakistan is planning to raise $200 million to $250 million from Chinese investors over the next six to nine months. AHL predicted that market outlook for the week would remain positive above 112k. Insight Securities Head of Sales Ali Najib stated that it was a "clear sky day" at the PSX as the KSE-100 floated easily and called the day at 114,230, up 983 points.

After some initial profit-taking, there were no bumps in the road. Investors engaged in value hunting following last week's massive sell-off, as blue-chip stocks were available at attractive price levels, offering handsome dividend yields.

Anticipation of 100-basis-point rate cut in the upcoming monetary policy, expectations of inflation cooling down to 3-3.5% in January and prospects of better corporate announcements kept bears at bay, he remarked.

In its comments, Topline Securities mentioned that Monday's rally was fuelled by strong buying across different sectors, underpinned by optimism about economic indicators and expectations of improved December quarter earnings.

Notably, blue-chip stocks and high-volume sectors witnessed heightened investor activity following last week's market pullback, it said.

Overall trading volumes increased to 521.2 million shares against Friday's tally of 499.8 million. The value of shares traded during the day was Rs28.3 billion.

Shares of 449 companies were traded. Of these, 280 stocks closed higher, 116 fell and 53 remained unchanged.

WorldCall Telecom was the volume leader with trading in 70.1 million shares, rising Rs0.03 to close at Rs1.78. It was followed by Cnergyico PK with 39.6 million shares, gaining Rs0.27 to close at Rs6.95 and Sui Southern Gas Company with 31.9 million shares, gaining Rs3.83 to close at Rs43.76.

During the day, foreign investors sold shares worth Rs933.7 million, according to the NCCPL.