Stocks rally in oversold market; renewed Kekra-1 hopes fire up E&P

Stocks on Wednesday pared some losses, scoring fresh gains in an oversold market led by auto, cement, banks, and oil and gas companies, amid renewed hopes of a big offshore hydrocarbon discovery, while approval of new tax amnesty scheme also lifted the sentiment, dealers said.

Topline Securities in a report said the benchmark index broke five-day losing streak mainly on excitement of offshore drilling completion news that kept the oil and gas exploration (E&P) sector in limelight to become the top index booster.

Moreover, the brokerage said the power sector turned out to be the second largest contributor, adding 62 points to index on the back of possible resolution of circular debt in coming months as stated by a federal minister.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 1.2 percent or 406.56 points to close at 34,291.65 points, while KSE-30 rallied 1.5 percent or 240.29 points to end at 16,281.99 points level.

Of 327 active scrips, 219 moved up, 98 retreated, and 10 remained unchanged. The ready market volumes stood at 110.886 million shares, as compared to the turnover of 105.706 million shares in the previous session.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said the market was oversold after receiving a heavy beating in the last two or three weeks, making some of the shares attractive, encouraging buying.

Ahmad said the announcement of tax amnesty scheme, aimed at widening the tax net through documentation of the economy, would not only improve collection but also improve liquidity in the capital market and the banking system.

Madiha Javed, head of research at Ismail Iqbal Securities, said the market remained positive throughout the session today but lost some early gains near the close as investors booked profits.

“Main support came from E&P companies that gained 207.80 points on completion of off-shore drilling at Kekra-1 with results expected to be announced within the coming week,” Javed said.

The overall sentiment was positive and the market at one stage hit the session-high of 34,443 points mainly drawing strength from tax amnesty scheme seen to help pump up the economy, the MSCI’s keeping PSX in its emerging market index, and reports that foreign companies have completed offshore drilling.

However, just before the close some profit-taking was witnessed on two factors.

One that a rise would prompt some institutions to sell their holdings if the market stayed in the positive zone for couple of more days and second investors feared that following rupee’s plunge to Rs146 to dollar in open market the interbank was likely to feel the pinch soon which might lead to the further devaluation in the near future.

The highest gainers were Rafhan Maize, up Rs310.00 to close at Rs6510.00/share, and Phillip Morris Pakistan, up Rs162.50 to finish at Rs3649.00/share.

Companies that booked highest losses were Nestle Pakistan, down Rs378.50 to close at Rs7191.50/share, and Shezan International, down Rs23.69 to close at Rs450.14/share.

K-Electric Limited recorded the highest volumes with a turnover of 9.164 million shares, while the scrip gained Rs0.3 to close at Rs4.22/share.

The lowest volumes were witnessed in Pakistan International Bulk, recording a turnover of 3.682 million shares, whereas the scrip gained Rs0.2 to end at Rs8.74/share.