Stocks stretch stride on macroeconomic outlook

Stocks on Thursday stretched the stride that started yesterday on brightening macroeconomic indicators with trade value crossing a record Rs20 billion mark, while further sentimental support came from Moody’s upgrade of major local banks outlook, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 0.92 percent or 370.58 points to close at 40,641.10 points, whereas its KSE-30 index was up 0.93 percent or 171.48 points to end at 18,571.15 points.

Samiullah Tariq, director research at Arif Habib, said the investor confidence had improved significantly and inflows substantially.

“Banks’ earnings are expected to show strong improvement and might record healthy profits. Moreover Moody’s upgrading the outlook for the country’s economy and now for the banks from negative to stable bodes well for overall environment and confidence,” Tariq said.

Of 404 active scrips, 226 were up, 159 down, and 19 were unchanged. Volumes reached 507.900 million shares, compared to 393.150 million in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporations said stocks closed higher led by oil, banking, and cement sectors, amid upbeat data on July-November cement sales, rising global crude prices, and Moody’s positive review on Pakistani banks.

“Foreign inflows, upbeat petroleum products’ sales data in November 2019, rising foreign exchange reserves and improving economic outlook played a catalyst’s role in the bullish close,” Mehanti added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said the macroeconomic indicators helped boost sentiment leading the index to enter an overbought zone as it was now closing in on 41,000 points’ levels.

“We saw some profit-taking and might see some more in the coming sessions but as the inherent sentiment has been quite strong because of political stability and inflow of foreign investment, trimming would be limited…,” Ahmad said.

Faisal Shaji, strategist at Standard Capital, said the market closed to its resistance level. “Investors booked profits, especially in cement sector, while the index is likely to consolidate around 40,000 to 42,000 level in the coming few weeks.”

Positive economic indicators were propelling market right now, where participants were keenly watching factors such as actual materialisation of projects and governance-related issues, Ahmad added.

Moody's Investors Service has affirmed the B3 long-term local currency deposit ratings of five Pakistani banks and upgraded the outlook to stable from negative.

Topline Securities in a market note said, this (Moody’s review) spurred positivity in the market, which saw traded value breach the Rs20 billion mark, highest in calendar year 2019, to date.

The highest gainers were Nestle Pakistan, up Rs150 close at Rs6,900/share, and Colgate Palmolive, up Rs94.50 to finish at Rs1984.50/share.

Companies that booked highest losses were Island Textile, down Rs70.60, to close at Rs1,341.40/share, and Bata Pakistan, down Rs23 to close at Rs2,126.49/share.

United Foods Limited recorded the highest volumes with a turnover of 35.241 million shares and gained Rs0.08 to end at Rs13.14/share.

Power Cement recorded the lowest turnover at 12.818 million shares, gaining Rs0.29 to end at Rs7.22/share.