Stocks gain 1.8 percent as economy fears ease; cement rallies

Stocks rallied, lifting the benchmark index to 1.8 percent on Wednesday, as improved economic outlook and expectations of fiscal discipline under the new government boosted investors’ sentiment, dealers said.

… positive news on the economic front in the shape of arrangement of external account financing through multiple sources surfaced over the weekend and led to strengthening of rupee against the greenback by 3-4 percent,” Topline Research said in a post market note. “Since the election last week, Pakistan equity markets have gained 2,218 points as investors’ cheered political clarity.”

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 1.80 percent or 770.18 points to close at 43,556.63 points. KSE-30 shares index rose 1.84 percent or 392.93 points to end at 21,728.88 points.

Of the 400 active scrips, 296 advanced, 91 declined, and 13 remained unchanged. The ready market volumes stood at 377.933 billion shares as compared with the turnover of 385.493 billion shares in the previous session.

Analyst Radha Kirshan Khatri of WE Financial Services Limited said the benchmark index continued its post-election rally “since bull-run witnessed across the board”. “The investor’s sentiments are being restored on the back of some support at economic front since Chinese Government agrees to provide $2 billion loan which will support dwindling foreign exchange reserves.” Khatri said the market expects some profit booking in the coming session as the index gained 3,000 points in the last four sessions.

Hamad Aslam, director research at Elixir Securities said the trading activity also posted a remarkable surge, as over 100 million dollars’ worth of shares traded hands “after a very long time”.

Positive sentiments continued from last week as investors cheered the formation of Pakistan Tehreek-e-Insaaf government. “However most important news was the remarkable recovery posted by rupee in the open market over the weekend, followed by congruent recovery in inter-bank on Monday,” Aslam said.

Analysts said the rally was led by hopes of political stability, inflows and commitments from China on flows of $2 billion and commitment from IDB for a $4.5 billion deferred payment facility for oil imports.

Resultantly, the key sectors that stood out automobile and cement, while devaluation friendly sectors such as energy and oil and gas lagged during the trade. Companies reflecting highest gains included Nestle Pakistan, up Rs496.82 to close at Rs10,990.00/share, and Colgate Palmolive, up Rs144.50 to close at Rs3034.50/share.

The major losers were Wyeth Pakistan Limited, down Rs48.79 to end at Rs1370.80/share, and Archroma Pakistan, down Rs16.74 to close at Rs498.26/share. The highest volumes were witnessed in World Call Telecom with a turnover of 35 million shares.

The scrip gained Rs0.15 to close at Rs2.11/share. It was followed by Engro Polymer with a turnover of 12.956 million shares. The scrip gained Rs1.45 to close at Rs35.03/share. Bank of Punjab witnessed the lowest volumes with a turnover of 15.308 million shares. Its scrip lost Rs0.1 to close at Rs11.96/share.