Stocks shrug off CPI stats to rally over a percent

Stocks on Wednesday bounced back on strong fundamentals, evident from investors’ shrugging off Consumer Price Index (CPI) inflation numbers, touching eight-year high in November, dealers said.

Pakistan Stock Exchange’s (PSX) KSE-100 shares index was up 1.21 percent or 481.79 points to close at 40,270.52 points, whereas the KSE-30 grabbed 1.07 percent or 195.46 points to end at 18,399.67 points.

The CPI inflation spiked to 12.67 percent in November on a year-on-year basis, beating the market consensus and at the same time pouring cold water on the expectations of a monetary softening in the next policy announcement.

Arif Habib Corp’s Ahsan Mehanti said bullish sentiments prevailed at the PSX on stronger economic outlook as investors weighed upbeat petroleum products sales and reports of further surge in current account surplus in November.

“Dismal CPI inflation numbers for November and speculations on likely tightening of monetary policy invited mid-session pressure.”

However, recovery in global crude oil prices and economic stability played a catalytic role in bullish close, Mehanti added.

As many as 401 scrips were traded on Wednesday, of which 294 gained, 87 lost, and 20 saw no change. Around 393.15 million shares exchanged hands today, compared to 448.87 million, yesterday. Topline Securities in a note said,” Overall, positive momentum continued … given the rebound that was witnessed early on, where the market recovered from 129 points down”.

Despite higher-than-expected CPI stats … investors remained unfazed and another strong day was delivered with sentiment standing tall, the brokerage said in its report.

An analyst at Arif Habib Limited said the market took a dip on Wednesday as well, following Tuesday’s slide of 400 points, and fell by 129 points during the session. “The benchmark index, however, came back strongly. Buying activity was seen in cement, autos, steel, and banking sectors. Even higher CPI numbers couldn’t dent the buying activity much,” the analyst added.

Bata Pakistan, up Rs101.02 to close at Rs2,149.49/share, and Rafhan Maize up Rs100 to close at Rs7,000/share, were among the top gainers of the day.

The major losers were: Island Textile, down Rs73.8 to close at Rs1,412/share, and Nestle Pakistan that lost Rs64.5 to end at Rs6,750/share.

Danish Ladhani at JS Global Capital said equities closed on a positive note, while, on the economic front, CPI inflation was slightly higher than market expectations.

“Moving ahead, we expect market to remain positive in the coming trading sessions,” Ladhani said.

Moreover, cements, financials, and exploration and production companies lifted the market. Lucky Cement closed 2.8 percent higher, Oil & Gas Development Company 0.6 percent, Pakistan Petroleum 0.5 percent, MCB Bank 1.6 percent, United Bank 1.7 percent, and HBL gained 0.7 percent, being the major contributors.

Unity Foods with a turnover of 26.85 million shares was the volume leader and it gained 18 paisas to close at Rs13.06/share. Lotte Chemical, which gained 42 paisas to close at Rs15.35/share, was second with 17.66 million shares. With a turnover of 15.97 million shares, K-Electric was third, while it grew by 07 paisas to finish at Rs4.62/share.