Stocks rally as bargain-hunters binge on deals in oversold market

Stocks on Monday rallied near three percent as big bargain-hunters came out to make the most of a staggeringly oversold market that has lost over 32 percent of its value in one-year of the Pakistan Tehreek-e-Insaf-led government and almost 20 percent this year, dealers said.

Topline Securities in a note said after multiple straight sessions of losses the market made a coveted recovery, drawing strength from attractive valuations, and tracking international equity markets and oil prices amid subsiding Kashmir issue concerns. “Trading activity improved as volumes jumped 57 percent, while the value also increased by 15 percent,” the brokerage added.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 2.77 percent or 797.79 points to close at 29,562.42 points level, while KSE-30 followed suit with a high of 3.33 percent or 446.11 points to end at 13,852.89 points level. Of 354 active scrips, 283 up, 51 retreated, and 20 remained unchanged. The ready market volumes stood at 102.515 billion shares, as compared to a turnover of 65.212 million shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporation said, “Stocks closed strogner amid higher trades led by scrips across the board on institutional speculation in oversold scrips amid foreign inflows”. Surging global equities, higher global crude prices, improving foreign exchange reserves and external account position, and upbeat data on power generation in FY19 paved the way for a bullish close, Mehanti added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities said the equities closed higher mainly because of the recent bearish spell had left the market in an extremely oversold position.

The government’s announcement to replace the chairman of Securities and Exchange Commission of Pakistan (SECP) and introduction of Musharka financing might help support the market and resolve issue of liquidity to some extent. The stock market in the early hour of trade was bit dormant-to-negative and even touched a session low of 28,670 points. It, however, recovered sharply on the back of fresh support arriving from financial institutions and some of the mutual funds and foreign investors.

At the end of first year of Pakistan Tehreek-e-Insaf government, the market has lost around 32 percent and since the beginning of 2019 has shed 20 percent to become the worst performing capital market. However, yields and offerings of the companies have increased, which is seen attracting new investment in the firms, offering good dividend yields.

Arif Habib Limited in their report said, “The mutual funds, which have been a major seller during the past several sessions, were not selling with the same aggression as in recent past. Oil and gas exploration and production sector and banks, which have received repeated battering in the past couple of sessions, moved north with most volumes observed in banks”. The highest gainers were Indus Motor Company, up Rs44.01 to close at Rs1006.11/share, and Wyeth Pakistan Limited, up Rs28.60 to finish at Rs600.60/share.

Companies that booked highest losses were Nestle Pakistan, down Rs314.75 to close at Rs5,980.25/share, and Bata Pakistan, down Rs61.85 to close at Rs1,175.16/share.

TRG Pakistan Limited recorded the highest volumes with a turnover of 7.468 million shares, whereas the scrip gained Rs1 to end at Rs13.22/share. Pakistan Elektron posted the lowest turnover of 2.495 million shares, whereas the scrip gained Rs1 to end at Rs15.66/share.