Stocks surge 2.42 percent as pre-election rally sets in

KARACHI: Stocks on Wednesday massively built on yesterday’s rally crossing 40,000 points mark to gain 2.42 percent as financial institutions binged on rewarding valuations in blue chips, hoping the July 25 vote to go as planned, peacefully, dealers said.

Shumaila Badar, head of research st Ismail Iqbal Securities said value-hunters sought to accumulate stocks ahead of the elections, adding, sentiment drew strength from an increase in steel prices a day after urea and cement prices went up.

Amreli Steel announced an increase in prices of rebar by around Rs 4,000 per ton while International Steel (ISL) announced an increment in cold rolled coil price of Rs 2,000 per ton in order to pass on the impact of Rupee devaluation.

“We expect some profit booking in the coming sessions because of the gains made and if all goes well in the elections then we expect a rally immediately after it”, she added.

Pakistan Stock Exchange’s (PSX) KSE-100 shares index rose 2.42 percent or 964.92 points to close at 40,897.90 points.

The KSE-30 shares index jumped 2.68 percent or 527.22 points to finish at 20,187.63 points.

Of 378 active scrips, 307 advanced, 52 declined, and 19 remained unchanged.

The ready market volumes stood at 247.827 billion shares compared to a turnover of 141.973 billion shares in the previous session.

Ahsan Mehanti from Arif Habib Corporation said that stocks closed bullish on investor speculations in scrips across the board ahead of major earnings announcements due next week.

“Reports of surging local cement and fertiliser prices, rupee stability and higher banking spreads contributed to a bullish close,” Mehanti added.

The market from the start of the proceedings showed positive signs and the index made healthy increase under the lead of steel, cement, fertiliser and some of the oil shares.

Topline Securities in its daily review said commercial banks continued to

gain ground as market expects further interest rate hike in upcoming monetary policy.

“Similarly, cement sector as well as fertiliser sector continued yesterday’s rally as increase in prices yesterday kept the sentiment positive and they cumulatively added 529 points to the index,” the brokerage said.

Investors expect a likely rally in the oil shares was in the making as following the devaluation of rupee the prices of petroleum products were seen rising further in the range of Rs3 to Rs5/liter, helping boosting margins.

It appears that market has entered the pre-election rally and the financial institutions are active in choice scrips and blue chips, a leading trader said.

Murtaza Jaffar from Elixir Securities advised the investors to closely monitor electoral process next week.

On the political front the accountability court adjourned trial proceedings in the Al Azizia corruption reference against the Sharif family until July 30 after former premier Nawaz Sharif’s counsel informed Judge Mohammad Bashir that the Islamabad High Court (IHC) had admitted petitions seeking transfer of the references from Bashir's court.

The foreign direct investment (FDI) remained flat at $2.76 billion during 2017 18, showing a meager increase of 0.8 percent over the preceding fiscal year.

However, the share of Chinese investment ($1,585 million) increased to 57 percent of the total inflows during the fiscal ended on June 30. The share of Chinese investment was 44 percent of the total FDI in FY17, which indicates that inflows from destinations other than China have declined in FY2018.

The highest gainers were Colgate Palmolive, up Rs55.00 to close at Rs3249.00/share, and Indus Motor Company, up Rs53.86 to finish at Rs1314.07/share.

Companies that booked highest losses were Nestle Pakistan, down Rs435.00 to close at Rs10485.00/share, and Phillip Morris Pakistan, down Rs130.37 to close at Rs2477.86/share.

Bank of Punjab recorded the highest volumes with a turnover of 8.938 million shares.

The bank’s scrip gained Rs0.39 to close at Rs12.44/share was followed by Engro Polymer with a turnover of 10.308 million shares, whereas the scrip gained Rs1.4 to close at Rs30.04/share.

The lowest volumes were witnessed in Dolmen City, recording a turnover of 7.672 million shares and losing Rs0.14 to end at Rs12.58/share.