Stocks cheer low MTBs yields amid high loan hopes

January 28, 2022

Stocks edged up on Thursday, applauding a dip in government papers’ rates and gaining sentimental footing from central bank governor’s hopes of winning International Monetary Fund's nod...

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Stocks edged up on Thursday, applauding a dip in government papers’ rates and gaining sentimental footing from central bank governor’s hopes of winning International Monetary Fund's (IMF) nod to loan programme, traders said.

KSE-100 Shares Index, the key gauge of country’s capital market, climbed 127.99 points or 0.28 percent to 45,083.04 points at Pakistan Stock Exchange (PSX). The benchmark index touched a day high of 45,181.51 points and a low of 44,955.05 points during the trade.

“We are confident it (IMF Program) will revive as some of the key measures recently taken by the government have been in the direction to fulfil the IMF’s prior actions,” said Dr Reza Baqir, Governor State Bank of Pakistan (SBP), in an interview to Bloomberg Television.

Zafar Moti, former director PSX, said the market took a turn for the better on Thursday.

Volumes remained low as usual, while trade was recorded in the third-tier scrips, he said, adding the best scrips were however not being traded.

“Pakistan is expected to strike a deal with IMF and if that happens then other donor agencies will also look positively towards Pakistan, which will also benefit the capital market,” Moti said. He said, however, rising coal and oil prices were a cause of concern as they would increase the inflation.

Ahsan Mehanti, an analyst at Arif Habib Corp, said, stocks closed bullish a day after cut-off yields of government’s MTBs (Market Treasury Bills) fell by 68 basis points on Wednesday.

Record surge in global crude oil prices and SBP (State Bank of Pakistan) hopes for positive IMF board review and release of tranche under EFF (Extended Funding Facility) contributed to a bullish close, Mehanti said.

However, he added that mid-session pressure remained because of political protests and slump in global equities.

KSE-30 Shares Index also closed rose 89.79 points or 0.51 percent to 17,828.10 points.

Traded shares increased 36 million to 173.59 million from 137.30 million. Traded value increased to Rs6.57 billion from Rs5.36 billion. Market capital, however, shrank to Rs7.704 trillion from Rs7.711 trillion. Out of 333 actives in the session, 135 posted gains, 169 losses, while 29 remained unchanged.

Topline Securities in a note said the market opened on a positive note as investors cheered yesterday’s T-Bill auction as cut-off yields declined by 15-70 basis points, the brokerage said.

According to the report, major support came from TRG, HUBC, MARI, ABL, LUCK, and UNITY, while PAKT, FFBL, COLG, and DAWH turned out to main laggards.

Sapphire Fiber ended up as the top gainer, rising Rs48.98 to Rs860.98 per share, followed by Pak Services that jumped Rs41 to Rs1,650 per share. Unilever Foods was the loss leader of the day as it fell Rs134 to Rs22,275 per share, followed by Colgate Palm that dropped Rs66 to Rs2,400 per share.

JS Research in its market wrap said the index mainly recovered because of TRG, HUBC, PSEL, MARI, and ABL.

“Going forward, we recommend investors to book profits in the range of 45,300 to 45,500 points and wait for the political dust to settle to take any fresh buying positions,” the brokerage report suggested.

TRG Pakistan Ltd was the highest traded stock of the day with 19.12 million shares. It was followed by Hum Network with 15.24 million shares.

Unity Foods Ltd, WorldCall Telecom, Cnergyico PK, Fauji Fert Bin, TPL Properties, K-Electric Ltd., Bank Al-Falah, and Treet Corp were among some of the well-traded stocks.

Turnover in the future contracts surged to 225.99 million shares from 180.26 million on Wednesday.

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