Stocks edge up on short covering amid grey list exit hopes

Stocks edged up on Friday on short covering and a wave of optimism following China’s showing strong solidarity with Pakistan on Financial Action Task Force (FATF) issue, stoking hopes of an exit from the anti-terror financing watchdog’s grey list soon, dealers said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 0.30 percent or 126.08 points to close at 42,633.02 points level. KSE-30 shares index followed suit with a high of 0.40 percent or 78.31 points to end at 19,806.85 points level.

Analyst Ahsan Mehanti from Arif Habib Limited said, “Stocks showed recovery led by banking and cement stocks amid thin trade as investors weighed reports of likely FATF grey list exclusion by June on diplomatic support in the group’s Paris meeting next month”.

“Strong financial results in oil and gas sector, upbeat data on FDIs (foreign direct investment) in July-December, foreign inflows, rupee stability, and surging foreign exchange reserves led to a positive close,” Mehanti added.

Of 350 active scrips, 178 were up, 152 down, and 20 ended unchanged. Volumes slipped to 173.043 million shares, when compared with 230.827 million shares in the previous session.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said “Stocks were mostly mixed because of the correction phase. The rollover week is ahead and a large adjustment is expected so the market will tilt downwards”.

“However, supporting development could help trigger some momentum in the market where positive news arriving from FATF to help impair overall sentiment,” Ahmad added.

A leading trader said, “Investors have been optimistic that Pakistan may be out of the FATF’s 'grey list' in its meeting next month due to the active support of China and tactical support from some Western countries.

“Exiting grey list will open doors for financial aid from the IMF (International Monetary Fund), World Bank, ADB (Asian Development) and the European Union, helping improve Pakistan’s struggling financial situation,” the trader added.

However, against expectations the fertiliser sector shares showed red signs following the confusion regarding GIDC (Gas Infrastructure Development Cess) cut as no official notification has been announced yet.

Moreover, investors are waiting for overall gas price announcement, as only then its impact on the overall economy and the fertiliser sector could be estimated.

Fertiliser stocks were supposed to be in the positive column on the back of healthy urea off-take, which clocked in at 6.2 million tons, up 6 percent in 2019, compared with 2018.

Off-take has increased due to shift in crops and higher commodity prices that allowed farmers to use balanced mix of fertiliser in order to enhance yield, a leading analyst said.

Top gainers were Sapphire Fiber, up Rs29.56 close at Rs784.57/share, and Mehmood Textile, Rs24 to finish at Rs463/share.

Major loss-makers were Phillip Morris Pakistan, down Rs119.50 to close at Rs2337.50/share, and Shifa International Hospital, down Rs16.40 to close at Rs288.45/share.

Maple Leaf Cement recorded the highest volumes with 17.689 million shares, gaining Rs0.62 to end at Rs23.54/share, while Fauji Cement’s turnover was the lowest with 4.319 million shares and it gained Rs0.26 to end at Rs16.86/share.