Stocks snap five-day losing streak on attractive valuations

Stocks managed to partially claw back losses amid a nerve-wrecking bull-bear fight on Wednesday after a five-day bearish spree as bulls cherry-picked Index names to help the benchmark Index gain more than one percent, dealers said.

“Equities snapped five-day losing streak and closed a highly volatile session in black on a day that saw a clear tussle between bulls and bears as benchmark KSE-100 Index swung sharply on both sides in a wide range of over 1,900 points,” Elixir Securities said in a report.

The KSE 100-share Index of Pakistan Stock Exchange gained 1.25 percent or 560.01 points to close at 45,474.46 points. KSE 30-share Index rose 1.51 percent or 353.09 points to end at 23,672.52 points. As many as 377 shares were active; of which 190 increased, 173 decreased and 14 remained unchanged.

The ready market volumes stood at 346.468 million shares as compared to 294.973 million shares a day earlier. Market opened gap down as wider market carried bearish momentum on domestic and geopolitical concerns with major dent in early trading coming from the Index heavy oil sector as participants tracked overnight losses in global crude prices.

Dealers said early Index decline, however, was underscored by low volumes that led to market quickly recovering to fill the gap within the first hour of trading. The market then witnessed another round of hammering that pulled the Index down as much as 2.4 percent followed by a surge of more than 4.4 percent from its intra-day low as investors primarily institutional investors cherry-picked names across major sectors.

Analyst Ahsan Mehanti at Arif Habib Corp said stocks showed recovery, led by oversold banking, fertiliser and oil sectors on strong valuations in late session institutional buying. “Concerns over $30 billion trade deficit, slump in global crude prices and report on US tougher policy on Pakistan invited early session pressure,” Mehanti said. “However, selected steel and cement stocks outperformed others on development commitments in federal and provincial budgets.”

Going forward, analysts see flows continuing to guide broader market’s direction albeit on low volumes as participants got into holiday mood ahead of three-day Eid holidays next week. Companies, reflecting highest gains, included Service Industries up Rs49 to close at Rs1,359/share and Millat Tractors that rose Rs46.06 to end at Rs1,336.04/share.

Companies, with most losses, included Pak Services down Rs47.50 to end at Rs902.50/share and Wyeth Pakistan that fell Rs42.25 to close at Rs2,038.75/share. Highest volumes were witnessed in TRG Pakistan with a turnover of 23.27 million shares. The share value shed Rs1.63 to close at Rs42.72/share. Bank of Punjab was the second with a turnover of 20.204 million shares. It fell five paisas to end at Rs10.81/share. K-Electric was the third with a turnover of 20.028 million shares. It was down 10 paisas to finish at Rs6.85/share.