Stocks out of woods; fundamentals in focus

Resurgence in market performance is expected to continue as result season is in full swing, while fundamentals are back in focus, dealers said.

They said cement, power and fertiliser sectors are expected to attract significant investors’ interest on cheap valuations.

Stocks surged over five percent in the week ended September 20 primarily due to successful meeting between the premiere and stock brokers last Saturday, which made participants to hope for government support, while sturdy corporate earnings suggested stable growth.

Analyst Atif Zafar at JS Global Capital said local bourse slung shot higher during the week, as expectations started to rise for a potential Rs20 to 25 billion bailout package by the government for the stock market alongside some tax reliefs.

“There was also some optimism about economic indicators too as the government notified hike in regulatory duties on imports to cut import bill and a revised [trade incentives] package to boost country’s exports,” Zafar added. 

The KSE 100-share index gained 5.62 percent or 2,241.11 points to close the week at 42,087.89 points. The KSE 30-share index surged 5.97 percent or 1,206.95 points to end at 21,416.69 points. Trade activity also picked up with an average volume increasing 27 percent to 185 million shares/day.

After emerging as aggressive buyers last week, foreigners opted to sell shares worth $7.4 million this week, while mutual funds and individuals also continued with their selling streak, recording net outflows of $4.3 million and $5.2 million, respectively. 

Banks and insurance companies continued to be enticed by attractive valuations as they mopped up shares worth $9.2 million and $3.6 million, respectively.

Topline Securities, in a report, said participation was upbeat as proposed stock market relief package and easing concerns over economic variables sparked investors’ confidence. 

“Forex reserves and current account numbers released during the week came better than the market expectations,” the brokerage added. “Investors’ sentiment was further fueled by strong corporate results of select companies. Also, thaw in Pak-US relations boosted investor sentiments.”

A 37 growth in cotton production also augured well for the market.

Oil refinery was up 78 percent. Attock Refinery posted higher than expected quarterly result, which boosted sentiments, while National Refinery and Attock Petroleum also rallied after announcing their results. Oil marketing companies rose eight percent and exploration and production sector increased six percent.

Cement sector rose 11 percent as concerns over further dip in prices subsided. DG Khan Cement lifted confidence after announcing higher-than-expected results. Fertiliser sector was up six percent.