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March 28, 2020

Stocks gain 3 percent as SBP package calms jitters

Business

March 28, 2020

Stocks broke a long bearish spell on Friday and gained 3 percent after the State Bank unveiled a package for industries and the capital market investors to help pacify the mood, dealers said.

An analyst from Topline Securities said the market remained largely in positive zone, where value buying was observed on the last trading session of the week, as stocks gained in line with regional markets.

However limited participation was observed by investors, as sceptical investors continued to remain on the sidelines amid the ongoing covid-19 crisis, the analyst said. Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 3.09 percent or 842.37 points to close at 28,109.57 points level. KSE-30 shares index followed suit with a high of 3.71 percent or 441.05 points to end at 12,320.24 points level.

Of 304 active scrips, 228 moved up, 56 retreated, and 20 remained unchanged. The ready market volumes stood at 169.438 million shares, as compared with the turnover of 186.745 million shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Stocks closed bullish led by scrips across the board, as investor weighed recovery in Asian stocks and positive outcome of economic relief package amid reduced stock margins by central bank and cut in key policy rate.” Midsession pressure was witnessed on concerns over rupee instability and prevailing economic uncertainty. Higher crude oil prices and speculations on likely approval of $1.4 billion International Monetary Fund (IMF) loan for economic relief played a catalytic role in the bullish close, Mehanti added.

Ovais Ahsan, chief executive officer at Optimus Capital Management, said, “The market rallied strongly on improved sentiment after the SBP eased margins on share financing by banks and futures contract rollover went through smoothly.”

The central bank on Thursday reduced margin call requirements against bank financing to 10 percent from 30 percent to help support the capital market following heavy losses in recent days on coronavirus fears.

Samiullah Tariq, director research at Arif Habib, said rupee appreciation boosted sentiment along with package announced for trade and industry, including deferment of debt payments, reduction in margin call, and allowance for companies to borrow funds from their associate companies.

Another positive factor for the market observers has been the continuous fall in coronavirus cases in Karachi, which strengthened the sentiment of domestic as well as foreign investors, Samiullah added.

Salman Ahmad, head of institutional sales at Next Capital, said, “The market after a long pause recorded gains mainly because of the rollover settlement which was executed comfortably as there were several open positions.”

He said, besides this, crude oil price in the global market has shown improvement which led to some recovery in domestic stocks, he added. The top gainers were Pakistan Tobacco, up Rs50.92 close at Rs1,699.98/share, and Rafhan Maize, up Rs50.00 to finish at Rs6,400.00/share.

Sapphire Fibre, down Rs54.28 to close at Rs670.00/share, and Bhanero Textile, down Rs44.00 to close at Rs671.00/share, were the main losers. K-Electric Limited recorded the highest volumes with a turnover of 41.173 million shares. Its scrip lost Rs0.04 end at Rs2.71/share.

The lowest volumes were witnessed in Pioneer Cement, recording a turnover of 3.594 million shares, whereas the scrip gained Rs1.71 to end at Rs24.52/share.