Market watch: Bourse rallies on strong outlook for cement sector

Benchmark KSE-100 index gains 114 points.

KARACHI: The stock market staged an impressive rally on the last trading day of the week, gaining more than 100 points to take the index within touching distance of the 15,800 points level. Sentiments were positive at the bourse after news that the country’s current account had posted a surplus of $432 million for the first quarter of fiscal 2013, allowing greater breathing space on the macroeconomic front.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index surged 0.72% or 113.56 points to end at the 15792.75 points level. Trade volumes mushroomed to 209 million shares compared with Thursday’s tally of 135 million shares. The value of shares traded during the day was Rs5.39 billion.

“Renewed foreign interest and stronger earnings announcements led to accumulation in oversold stocks in the oil, cement, banking and textile sectors,” commented Arif Habib Corp analyst Ahsan Mehanti. “Speculations ahead of major earnings announcements due next week and lower leverage costs played a catalyst role in bullish sentiments at the KSE.”

Shares of 338 companies were traded on Friday. At the end of the day 185 stocks closed higher, 108 declined while 45 remained unchanged. Almost 21% of volumetric activity was concentrated in the construction and materials sector, in which cement companies were the centre of investors’ attention on speculations of a healthy earnings outlook in select names.

Chemicals (13.9%), commercial banks (13.2%), fixed line telecommunication (12.1%) and personal goods (9.6%) rounded off the top five most active sectors in trading on Friday.

“The index was again led by the cement sector with DG Khan Cement and Lucky Cement both gaining 3.7% and 3.3% respectively. Both scrips are expected to announce their quarterly result next week, and are expected to beat the analyst estimates,” reported analyst Shakir Padela, who works at JS Global.

Fauji Cement was the volume leader with 25.05 million shares gaining Rs0.42 to finish at Rs6.76. It was followed by Jahangir Siddiqui & Company with 19.46 million shares gaining Rs1.00 to close at Rs14.29 and Azgard Nine with 15.84 million shares gaining Rs0.57 to close at Rs6.73.

“The oil and gas sector was out of favor with investors, who are looking to capitalise on upcoming cement sector results,” said Padela.

Foreign institutional investors were net buyers of Rs172.40 million, according to data maintained by the National Clearing Company of Pakistan Limited.

Published in The Express Tribune, October 20^th, 2012.