Stocks gain on good FATF vibes, monetary status quo hopes

Stocks on Wednesday gained on good vibes from Financial Action Task Force’s (FATF) Asian arm’s meeting to review Pakistan’s progress on compliance, amid bets that re-weighted inflation numbers have made a strong case for at least no further tightening of monetary policy, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index jumped 1.60 percent or by 487.63 points to close at 30,954.83 points, whereas KSE-30 hit a high of 2.09 percent or 298.39 points to end at 14,600.91 points.

Of 346 active scrips, 142 advanced, 184 retreated, and 20 did not budge at all. The turnover stood at 99.661 million shares, as compared to 48.205 million shares in the previous session. Faisal Shaji, Strategist at Standard Capital said, “Some of the confidence building measures by government boosted market”.

Buying remained limited to oil and power sector related companies, while and though investors’ confidence has been shaken in cement sector given the paucity of development projects, Shaji added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said,” The stock market made appreciable gains on a rise in crude oil prices, which helped rally local oil and exploration stocks, while with heavy weightage in the index oil and gas stocks helped boost share prices”.

Moreover, Ahmad said Asia Pacific Group’s meeting conducted in Bangkok gave positive signals to the market men that up till now Pakistani government’s efforts were moving in the right direction and its plans to counter and curb money laundering had proved fruitful.

Another soothing factor for the market is the monetary stance, which is seen to maintain a status quo as the interest rate has now peaked off. The speculations over a softening or maintenance of monetary policy stance by State Bank of Pakistan gained momentum after a change of weights in consumer price index (CPI) calculation mechanism led to an ease in inflation figures.

As per new methodology, the base year of inflation has been changed from FY08 to FY16, while weights of certain products are also changed to reflect more realistic consumption pattern of the public.

To note, the CPI rebasing activity is conducted after every 10 years which was initially scheduled to be completed by Jun 2017; however it was delayed by another year to Jun 2018 due to population census and later because of general elections.

An analyst from Arif Habib said positive expectations from ongoing Financial Action Task Force’s (FATF) meeting and relatively higher international crude prices kept the investors’ interest alive. “The OGDC and PPL led the index by hitting upper circuit and gaining significant volumes; however, both scrips closed below upper circuit,” the analyst said adding the index also drew support from banking sector, which saw HBL hitting upper circuit and other scrips trading mostly in green.

The highest gainers were Colgate Palmolive, up Rs94.99 close at Rs1994.99/share, and Millat Tractors, up Rs21.06 to finish at Rs724.18/share.

Companies that booked highest losses were Nestle Pakistan, down Rs189.36 to close at Rs5619.64/share, and Sapphire Fibre, down Rs42.25 to close at Rs802.75/share.

Maple Leaf recorded the highest volumes with a turnover of 11.505 million shares, whereas the scrip lost Rs0.78 to end at Rs16.45/share.

The lowest volumes were witnessed in International Steel Limited, recording a turnover of 2.888 million shares, whereas the scrip lost Rs1.07 to end at Rs39.27/share.