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November 19, 2019

Stocks scale 7-month peak on hopes economy may take a U-turn


November 19, 2019

Stocks on Monday blasted off to a seven-month high, extending gains, coming along steadily for last two weeks, on hopes the government’s stabilisation measures that succeeded in doing some tricks so far would likely turn the tide on economic growth down the line, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 827.67 points (2.20 percent ) to close at 38,411.56 points, whereas its KSE-30 index was up 403.91 points (2.33 percent) to finish at 17,744.44 points level.

Of 412 active scrips, 295 ended higher, 98 lower, and 19 ended the day unchanged, while volumes swelled to a record 466.079 million shares, compared to 369.038 million recorded in the last trading session.

Samiullah Tariq, director research at Arif Habib Limited, said, “With the government’s measures starting paying off in terms helping stabilising some key numbers with improving sentiment of foreign investors and inclination at debt market or treasury bills, investors seem to have taken some heart”.

A gain of more than 3,000 points in last two weeks was also because of declining rate of profit on NSS, Tariq said.

Ahsan Mehanti from Arif Habib Corporation said, “Stocks closed record high amid record trades on speculations ahead of central bank’s policy rate decision statement on November 22”.

Finance ministry’s affirmation over the macroeconomic stability, upbeat economic data on trade deficit, exports and easing political noise played a catalyst role in bullish close, Mehanti added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “The market recorded highest ever daily volume of 2019 with index also reaching around seven-month high showing the fundamentals have been quite strong”.

“The macroeconomic indicators are showing a positive strength and IMF (International Monetary Fund) nod to the sale of bonds helped break the resistance level.”

Now, all eyes were glued to expected monetary policy announcement where the direction would get further cemented, Ahmad said.

Faisal Shaji, strategist at Standard Capital, said, “The market is overbought where outlook looks very good in medium-term given improvement in macroeconomic indicators”.

A leading trader said, “Oil and gas sector relatively performed well on the back of the development that IMF may allow the government to issue sovereign guarantee for selling sukuk bonds”.

The government had been planning for a long time to issue energy sukuk bonds worth Rs200 billion to reduce a quantum of circular debt, which would help improve the working capital of gas, oil, and exploration companies, he said.

Arif Habib Limited in their market analysis said, “The index registered an increase of 868 points with majority of scrips trading in green and at upper circuits”.

The highest gainers were Unilever Foods, up Rs283 close at Rs7,000/share, and Pakistan Tobacco, up Rs99 to finish at Rs2498.50/share.

Companies that booked highest losses were Rafhan Maize, down Rs360 to close at Rs6,940/share, and Nestle Pakistan, down Rs300 to close at Rs6276.25/share.

The Bank of Punjab recorded the highest volumes with a turnover of 37.601 million shares, securing Rs0.39 to end at Rs11.26/share. Maple Leaf's turnover was the lowest at 9.820 million shares; however, the scrip gained Rs0.23 to end at Rs8.21/share.