Stocks rise on energy, pharma shares in pre-budget rally

Stocks rallied on Friday with energy shares and pharmaceuticals taking the lead amid expectation the government was likely to ease corporate tax in the upcoming federal budget and hopes the economy may show positive growth in 2020-21, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 0.68 percent or 231.03 points to close at 34,350.42 points, whereas KSE-30 followed the suit with a high of 0.57 percent or 85.48 points to end at 15,000.89 points level.

Brokerage Topline Securities in its daily market review said E&P (exploration and production) sector lead the rally gaining close 1.06 percent on the back of increase in international crude oil prices.

“Apart from energy shares, investor interest was also observed in cement and pharmaceutical sectors.

Of 319 active scrips, 191 up, 103 retreated, and 25 remained unchanged.

The ready market volumes stood at 89.134 million shares, as compared with the turnover of 143.642 million shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporation, said, “Stocks closed higher in the pre-budget rally at PSX as investors weighed proposed Rs630 billion PSDP outlay in the federal budget FY21 that if approved will boost cement, steel and auto sectors”.

Falling treasury yields, finance minister’s affirmations over no new taxes in the federal budget FY21, surging global crude oil prices, and government commitments over easing lockdown triggered a bullish trend at the PSX, Mehanti added.

Ovais Ahsan, CEO Optimus Capital Management, said, “The market closed the week on a positive note as the currency recovered by Rs1.64 versus the USD, allaying fears of a larger speculative move due to a heavy debt repayment led drawdown in central bank reserves”.

“Major gainers included the pharma companies, which are dependent on raw material imports, and suffer from weakness in the currency,” Ahsan said.

Saad Hashmey, executive director at BMA Capital Management, said, “The benchmark index rallied drawing strength from May 2020 exports numbers that showed an increase of 45 percent compared to April 2020. Investor participation however remained lower than Thursday’s session”.

“Upcoming budget announcement will dictate the future direction of the market,” Hashmey said.

An analyst from Habib Metro-Financial Services said, “The market has been relatively range-bound in the recent trading sessions as investors are waiting for the prevailing uncertainty on the macroeconomic front to end”.

He said the FY21 budget scheduled for 12th June was a key event for future direction of the market and “we recommend investors to tread cautiously at least until the budget is announced along with the government’s stance on key concerns”.

The top gainers were Sanofi-Aventis, gaining Rs30 to close at Rs858/share, and Abbott Laboratories, which strengthened by Rs24.66 to finish at Rs559.91/share. On the other hand, Sunrays Textile, losing Rs22.49 to close at Rs280.50/share, and Shield Corporations, shedding Rs19.03 to close at Rs234.97/share, ended up as the main losers of the day.

Maple Leaf Cement with 6.651 million traded shares led the volumes, gaining Rs0.64 end at Rs25.93/share. Pakistan Elektron’s turnover was the thinnest with 2.079 million shares and it ticked up by Rs0.15 to end at Rs23.85/share.