Stocks gain on support of financial institutions, foreign funds

The capital market recorded healthy gains of two percent on Thursday as activity of financial institutions and foreign fund houses geared up when central bank lowered yield on long-term bonds, indicating a stable economic outlook, dealers said.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Stocks closed bullish amid higher trades as investors weighed surge in global crude oil prices and government resolve for privatisation of SOEs.”

Strong financial results in the energy sector, and speculations on likely resolution of Gas Infrastructure Development Cess issue next week by the Supreme Court of Pakistan, played a catalytic role in the bullish close, Mehanti added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 1.99 percent or 628.56 points to close at 32,184.03 points level. KSE-30 shares index followed suit with a high of 2.19 percent or 324.41 points to end at 15,146.65 points level.

Of 357 active scrips, 263 moved up, 72 retreated, and 22 remained unchanged.

The ready market volumes stood at 136.566 million shares, as compared with the turnover of 99.363 million shares in the previous session.

Saad Hashmi, executive director at BMA Capital Management, said, “The market gave a very warm response to the sharp drop in PIB (Pakistan Investment Bonds) cut-off yields, as participants subsided concerns over the economic outlook; given the weight of strengthening of rupee along with lower August 2019 inflation number.”

In Wednesday’s PIB auction, participation remained on the higher side with the amount of Rs698 billion received against the target of Rs125 billion.

Interestingly, cut-off yield of three-, five-, and 10-year PIBs witnessed a significant drop of 130bps/105bps/91bps respectively.

Furthermore, he said that the market provided opportunities to all participants to fairly trade in their scripts. Index heavyweights, such as Habib Bank, Oil and Gas Development Company, Pakistan Petroleum Limited, United Bank, Hubco, Engro and Lucky kept the index green.

“We expect that this positive move will continue for the coming session,” Saad added. Salman Ahmad, head of institutional sales at Aba Ali Habib said, “The market responded sharply on back of technical correction as the equities since last couple of sessions were on the losing side.”

Foreign fund participation was on the rise in the last two sessions, it prompted local buyers to be part of the bandwagon. Moreover, the trimming of long-term bonds also helped gear the positive momentum in the market, as the equities were now slowly arriving to attractive levels compared to fixed income, Salman added.

The highest gainers were Wyeth Pakistan Limited, up Rs28.00 close at Rs678.00/share, and Archroma Pakistan, up Rs20.00 to finish at Rs480.00/share.

Companies that booked highest losses were Sapphire Fiber, down Rs36.04 to close at Rs684.90/share, and Rafhan Maize, down Rs11.00 to close at Rs5,700.00/share.

Lotte Chemical recorded the highest volumes with a turnover of 15.508 billion shares. Its scrip lost Re0.1 to end at Rs14.57/share. The lowest volumes were witnessed in PSO, recording a turnover of 3.095 million shares, whereas the scrip gained Rs7.14 to end at Rs149.98/share.