Stocks back in business on bargains, liquidity boost hopes

Stocks on Monday recovered over one percent on active covering from bargain hunters after a disastrous last week amid renewed hopes that reforms underway would give the capital market’s liquidity a leg up, dealers said.

Madiha Javed head of research at Ismail Iqbal Securities said “The benchmark index remained positive throughout the session with SECP (Securities and Exchange Commission of Pakistan) finalising reforms agenda for capital markets and corporate sector”.

“Reforms undertaken by regulator are expected to attract liquidity, facilitate ease of doing business and revitalise the capital market. The SECP has also allowed stock investors to take loan up to 180 days from banks to invest in capital market,” Javed said. Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 1.30 percent or 385.17 points to close at 30,057.29 points level. KSE-30 shares index followed suit with a high of 1.35 percent or 188.17 points to end at 14,119.86 points level. Of 331 active scrips, 232 went up, 81 retreated, and 18 remained unchanged. The ready market volumes were 77.447 million shares, as compared with the turnover of 109.964 million shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Stocks closed higher amid thin trade on investor speculations in the post earnings season rally at the market amid strong financial results in banking, fertiliser and energy scrips.”

Reports of PM meeting with SBP officials to review revision on interest rates and market liquidity, hopes for Kashmir tensions with European Union considering the situation, government’s resolve on privatisation of state-owned entities, and rupee stability led stocks to a positive close, Mehanti added.

Salman Ahmad, head of institutional sales at Aba Habib said some of the stability that surfaced at the market can be attributed to reports over the weekend that indicated a meeting between Prime Minister Imran Khan and SBP governor Reza Baqar over the interest rates was likely fruitful.

The stock market on the first session of the new week opened on a positive note but trade hit a 45-minute snag because of some technical error in the trading screen. The market from the word go was in the positive column mainly drawing strength from the SBP governor’s comments that the policies adopted by the government were moving in the right direction and as soon as the inflation would start cooling down, the interest rate would be reviewed.

However, a forecast that the inflation numbers were likely to cross the 11-percent mark and hit over 85-month or seven-year high dented the market sentiment but was rationalised with the thought that inflation has now peaked and so has the interest rate. It is not necessary for the upcoming monetary policy to see some easing, but under the immense pressure from the businessmen and political forces the interest rate should see some trimming for the revival of economy, an analyst said. The highest gainers were Colgate Palmolive, up Rs80 to close at Rs1750/share, and Bhanero Textile Rs38.10 to finish at Rs800.10/share.

Companies that booked highest losses were Murree Brewery, down Rs25.50 to close at Rs741.50/share, and Sanofi-Aventis, down Rs24.80 to close at Rs471.58/share. WorldCall Telecom recorded the highest volumes with a turnover of 12.193 million shares, gaining Rs0.07 to end at Rs0.82/share. The lowest volumes were witnessed in Pakistan Elektron, recording a turnover of 2.097 million shares, whereas the scrip gained Rs0.58 to end at Rs15.02/share.