Karachi shares rebound as bargain-hunters swoop in

KARACHI: Karachi stock market rebounded on Tuesday as institutions investors indulged in a burst of bargain hunting after five straight trading sessions of steep losses, dealers said.
Dealers said net foreign buying of 6.0 million a day earlier indicated that the market had reached the bottom and would pursue recovery going forward.
“After the smooth settlement of futures contracts, the market rallied after falling by nine percent in the last five sessions. Net foreign buying of $6.1mn (on Monday) also uplifted investors’ sentiments,” said analyst Samar Iqbal of Topline Securities.
Logging its record gain in a day the benchmark KSE-100 shares index rose 1,306.83 points or 4.52 percent on strong buying support from local institutions amid positive global cues like a gain in crude prices. KSE-30 shares index gained 860.68 points or 4.68 percent to end at 19,232.27 points.
As many as 372 scrips were active of which 321 advanced, 40 declined and 11 remained unchanged. The ready market volumes stood at 260.781 million shares as compared with 275.372 million shares in the last trading session.
Khurram Schehzad at Arif Habib Limited said the oversold market recovered. “State institutions came in for bottom fishing as usual while other buyers followed the suit. Net buying by foreign investors suggests uplifted sentiments and recovery would continue,” he said. “Moreover, the smooth settlement of futures contract released pressure on the investors while institutional support augmenting recovery also stalled further margin calls.”
Since 2009 market crash, Pakistan market recently saw biggest correction. It fell 17 percent from its peak in last 8 weeks. In the last five trading sessions Pakistan equities fell by 9.0 percent mainly due to foreign selling, which accounted for net selling of $128.3 million worth of equities in last two months, coupled with local funds redemptions; they withdrew $43 million in last month.
Since the recent fall is not due to any political or economic crisis or regulatory issue, thus, chances of market recovery in line with past trend are high.
Ahsan Mehanti at Arif Habib Commodities said the market gained confidence after the regulator advised stock exchange to remain alert for rumors and speculations as well as ensure risk management measures. Resultantly, index posted a record surge just after a record one day fall.
“Stocks rose across the board led by oversold banks, oil, fertilizers and cement scrips on speculations ahead of quarter-end results. Expected revision in local petroleum prices and institutional support at the quarter end close played a catalyst role in bullish activity at KSE”.
Many scrips in different sectors hit their respective upper limits on Tuesday, but the sector that had the most scripts hitting their upper lock was the banking sector, one of the most oversold sectors.
Bank of Punjab (BOP), Askari Bank (AKBL), HBL, MCB, ABL, UBL and Bank Al Falah all closed at upper limit. The cement sector also remained the focal point of investors’ attention with Lafrage Pakistan (LPCL), Lucky Cement (LUCK), Pioneer Cement (PIOC) and Attock Cement (ACPL) hit their upper locks.
Fundamentally, there are several positive triggers for the cement sector. As some cement companies are highly leveraged the recent interest rate cuts will have a positive earnings impact for this quarter along with expected higher local dispatch numbers for the whole sector.
“We expect that the recovery trend will continue and all the long ignored positive triggers will keep the market headed in the positive direction,” Ahmed Saeed at JS Global Capital said.
Highest volumes were witnessed in K-Electric Limited with a turnover of 44.875 million shares. The scrip gained Rs1.0 to close at Rs7.11. It was followed by Bank of Punjab (BoP) with a turnover of 24.681 million shares. It gained Rs1.0 to end at Rs8.05. Pak Elektron was the third with a turnover of 21.254 million shares. It gained Rs2.11 to finish at Rs44.44.