Stocks gain on earnings expectations, likely deal with IMF

The market climbed for the third consecutive session on Friday, closing the week in the positive on earnings expectations and news that the government will likely strike a deal with the International Monetary Fund (IMF) to boost the foreign exchange reserves and revive the economy, dealers said.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Bullish activity was witnessed at the Pakistan Stock Exchange led by selected scrips across the board amid speculation in the earnings season.”

Investors concerns have eased regarding debt after prime minister’s meeting with IMF and World Bank chiefs during China visit for the Belt and Road Forum. Likely approvals of proposed tax amnesty scheme, foreign inflows and higher global crude oil prices played a catalytic role in the bullish close, he added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 0.91 percent or 334.60 points to close at 37,130.63 points level. KSE-30 shares index followed suit with a high of 0.59 percent or 103.48 points to end at 17,670.89 points level.

Of 342 active scrips, 239 moved up, 83 retreated, and 20 remained unchanged. Ready market volumes stood at 143.894 billion shares, as compared with the turnover of 106.814 billion shares in the previous session.

Salman Ahmad, head of institutional sales at Aba Ali Habib said, “The stock market in the last couple of weeks received heavy battering, making the equities attractive, entering in oversold zone, which sparked the rally.”

He said a wave of optimism rose amongst the investors over the agreement with the IMF, which would help revive confidence of foreign investors too.

“However, the development related to IMF would dictate the market next week. Any emergence of harsh realities from the international financial institutions might trim the share values,” Ahmad added.

A leading analyst said that cement, auto and oil companies led the show on the weekend. Cement companies were on the rise and once again witnessed buying on the back of the news that an agreement was reached to gradually increase cement prices, which had moved down recently.

Auto shares were also up on the news that the decline in profits was due to lower sales, which were likely to climb back up in the quarter ended June 30, 2019 on higher sales and improved margins.

Oil companies were up on the hope of better financial results announcement next week, especially from the Oil and Gas Development Company Limited and Pakistan Petroleum Limited. The highest gainers were Pakistan Tobacco, up Rs122.50 to close at Rs2,572.50/share, and Phillip Morris Pakistan, up Rs94.02 to finish at Rs3,194.00/share.

Companies that booked highest losses were Bata Pakistan, down Rs77.42 to close at Rs1,471.08/share, and Nestle Pakistan, down Rs29.67 to close at Rs7,670.33/share. Bank of Punjab recorded the highest volumes with a turnover of 19.950 billion shares. The BOP scrip gained Rs0.16 to close at Rs12.71/share. The lowest volumes were witnessed in Lotte Chemical, recording a turnover of 3.556 million shares, whereas the scrip lost Rs0.13 to end at Rs16.88/share.