Karachi stocks rebound on growth, spending targets

Karachi stocks on Wednesday rebounded as government’s attractive growth targets and increased allocations for development for the next fiscal year renewed interest of investors in the leveraged shares.
Analyst Ahsan Mehanti at Arif Habib Commodities said bullish activity was witnessed as investors cheered growth target of 5.5 percent for FY16 and a record allocation of Rs580 billion for the federal public sector development program.
“Leveraged stocks led the rally on strong earnings outlook after a major discount rate cut announced by the SBP (State Bank of Pakistan),” Mehanti said.
The benchmark Karachi Stock Exchange (KSE) 100-share index gained 332.24 points, or 1.02 percent, to close at 32,842.59 points. KSE-30 shares index rose 207.25 points, or 1.0 percent, to end at 20,890.26 points.
As many as 360 scrips were active; of which 255 advanced, 83 declined and 22 remained unchanged. The ready market volumes stood at 200.102 million shares as compared to 98.527 million shares in the last trading session.
Moving forward, analysts recommend investors to remain cautious as the date of the budget comes closer.
Proposal to abolish import duty on raw material and machinery helped textile stocks move up while dollar appreciation against yen also renewed investors’ interest in auto sector.
Analyst Umair Hasan at JS Global Capital said investors cheered the rate cut and took interest particularly in highly leveraged scrips, primarily dominated by cements.
DGKC, FCCL, MLCF, CHCC ended 2.1 percent, 2.0 percent, 4.9 percent and 5.0 percent higher.
The banking sector witnessed recovery as investors saw shrinking interest margins after the rate cut as an opportunity to buy undervalued banking scrips, specifically those which heavily invested in Pakistan Investment Bonds.
ABL, HBL, MCB, NBP, and UBL ended 0.6 percent, 1.5 percent, 2.0 percent, 2.2 percent and 1.8 percent higher.
As global oil prices stabilise, oil and gas sector stabilized. PSO and POL closed up 1.0 percent and 0.4 percent, respectively.
Highest volumes were witnessed in Pak Elektron with a turnover of 27.087 million shares. The scrip inched up 89 paisas to close at Rs67.90/share. It was followed by Fauji Cement with a turnover of 20.243 million shares. It was up 67 paisas to end at Rs33.50/share. Byco Petroleum was the third with a turnover of 133.96 million shares. It rose 91 paisas to finish at Rs32.83/share.