Stocks pace ahead on sukuk nod, monetary status quo hopes

Stocks on Tuesday bulled ahead for the second straight session reacting positively to the reports that government is launching a sukuk worth Rs200 billion to settle a part of the prodigious circular debt, while speculations of monetary status quo also underpinned the rally, dealers said.

Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed bullish led by oil, banking, and auto scrips on strong earnings outlook, whereas tax concessions announced in the economic reforms package continued to boost sentiment. “Foreign inflows, improving external account pressures, upbeat data on corporate profit repatriation for July-December 2018, IDB’s (Islamic Development Bank) nod for $4.5 billion oil-based lending facility and recovery in global equities landed the market in the green,” Mehanti added.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 0.51 percent or 204.30 points to close at 40,624.39 points. KSE-30 shares index followed suit with a high of 0.64 percent or 124.70 points to end at 19,531.22 points.

Of 347 active scrips, 177 moved up, 147 retreated, and 23 remained unchanged. The ready market volumes stood at 154.732 million shares, compared with the turnover of 126.006 billion shares in the previous session, showing a decline in investor participation.

An analyst from JS Group said, “Moving forward we recommend investors to remain cautious and wait for clarity regarding IMF (International Monetary Fund) package; however one can reduce short-term position on strength”.

Finance Minister Asad Umer has said loan deal talks with the IMF were in the final stages. The volume of loan is not a major issue, the terms and conditions of the donor are, which may be very harsh, an analyst said. The State Bank of Pakistan is scheduled to announce monetary policy on January 31. A general market consensus is that as the government, through its efforts, has covered the short-term debt obligations, securing oil on deferred payment, the interest rate is very much likely to remain unchanged.

Besides announcing the monetary direction, the central bank will also unveil the structure of diaspora bonds in the statement. In the first phase, the government expects to raise $500 million through selling certificates to expatriates with an annual return of 6.75 percent.

Another factor which created some buying momentum in oil and power related shares was Economic Coordination Committee’s (ECC) nod to the issuance of Rs200 billion worth of Islamic bonds to help reduce circular debt.

Topline Securities in its daily market review said refineries closed in the green today, as the government notified a complete ban would be placed on the import of furnace oil.

Investors’ interest today remained largely in small cap stocks as PIAA, TRG and FFL were the volume leaders, generating 29 million in shares traded, cumulatively, the brokerage said.

The highest gainers were Attock Petroleum, up Rs21.50 to close at Rs451.63/share, and Millat Tractors, up Rs15.50 to finish at Rs852.52/share.

Companies that booked highest losses were J.D.W Sugar, down Rs15.25 to close at Rs289.75/share, and Wah-Noble down Rs12.50 to close at Rs320.00/share.

Dewan Cement recorded the highest volumes with a turnover of 10.556 billion shares. The scrip gained Rs1 to close at Rs13.87/share.

The lowest volumes were witnessed in Fauji Foods Limited recording a turnover of 18.006 billion shares, whereas the scrip lost Rs0.60 to end at Rs27.01/share.