Stocks fly for third day in bargain-hunting-powered post-budget rally

Stocks on Thursday extended gains for third straight session as relieved investors binged on bargains, shaking off the budgetary blues following the announcement of a not-so-tax-heavy finance bill, while a hike in public sector spending also resulted in sentimental boost, dealers said.

Muhammad Faizan Munshey, head of foreign institutional sales at Next Capital Limited said, “The stock market continued its upward journey, taking inspiration from Wednesday’s close, as the investors perceived the budget to be not as horrific as was expected. “It seemed like most of the negative budgetary measures were broadly anticipated and already discounted in the market.” The investors predict a strong support in the index and market activity following the activation of the state support fund for the stock market, which, as per market whispers, is expected in a week’s time, he said.

Munshey added that cement stocks once again closed mostly higher on speculations that prices of this key construction material would follow an incremental trend in the local market down the line.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 1.33 percent or 465.14 points to close at 35,403.07 points, while KSE-30 jumped by 1.24 percent or 205.17 points to end at 16,712.83 points.

Of 339 active scrips, 228 moved up, 88 retreated, and 23 remained unchanged. The ready market volumes stood at 154.324 million shares against 150.978 million shares recorded in the last session.

Ahsan Mehanti from Arif Habib Corporation said stocks closed higher in the post budget rally at the PSX led by scrips across the board on strong valuations.

“Investor confidence over government targets on external account imbalances, tax revenue of Rs5.55 trillion, fiscal stability, in the federal budget FY20 and late session surge in global crude oil prices guided the stocks to a decent close,” Mehanti added.

Samiullah Tariq, director research at Arif Habib Corporation said the budget announced, though, directly did not have much of an impact; however, the government’s planned crackdown on the movement of ill-gotten funds to raise revenue collection would prove advantageous for the capital market. Several taxes have been increased such on debt instrument to discourage investment, diverting funds to the stock market.

A leading trader said that companies belonging to cement and fertiliser sectors led the show today. The government’s decision to increase Public Sector Development Fund to Rs925 billion for the next fiscal year from the present allocation of Rs675 billion has boosted sentiment at the market. The higher spending hints the government would start buying cement to construct water reservoirs, motorways, highways, and flyovers, he added. Moreover, he said the investors see the package announced for farmers would increase consumption of fertilisers.

The highest gainers were Mari Petroleum, up Rs13.65 to close at Rs1095.43/share, and Lucky Cement, up Rs11.62 to finish at Rs402.03/share.

Companies that booked highest losses were Bata Pakistan, down Rs67.90 to close at Rs1312.10/share, and Jubilee Life Insurance, down Rs14.53 to close at Rs276.17/share.

Maple Leaf recorded the highest volumes with a turnover of 12.496 billion shares, gaining Rs1.08 to close at Rs24.10/share.

The lowest volumes were witnessed in DGKC, recording a turnover of 3.656 million shares, while the scrip gained Rs2.47 to end at Rs58.07/share.