Stocks up on E&Ps amid bets on a business-boosting budget

Stocks on Monday jumped on energy, cement, and steel stocks amid strong bets that the upcoming budget would be loaded with business-boosting incentives, while recovering regional bourses also strengthened the sentiment, dealers said.

Faisal Shaji, Strategist at Standard Capital, said, “The market is bracing for a pre-budget rally. Investors expect relief and reduction in RDs (regulatory duties) which could benefit auto sector & other export groups”.

“Following OPEC-plus countries' promise to cut production, the crude oil market grew stronger and the local oil exploration and production sector, having a major weight in the benchmark index, followed suit,” Shaji said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 1.16 percent or 399.15 points to close at 34,749.57 points, while KSE-30 hit a high of 1.13 percent or 169.77 points to end at 15,170.66 points.

Of 355 active scrips, 232 moved higher, 106 ended lower, while 17 remained unchanged. Trading volume stood at 222.416 million shares, as compared to 89.134 million shares in the previous session.

Brokerage Topline Securities in a note said, “In line with increase in global indices and international oil prices benchmark index closed positive”. The market remained positive for most part of the day as exploration and production sector was the major contributor in today’s momentum where the sector gained to close 3.31 percent higher, the brokerage said.

“Major financials i.e., MCB, UBL, and HBL also supported the index contributing cumulative 105 points to Index,” Topline said. Tahir Abbas, Head of Research at Arif Habib Limited, said, “Rally sparked at local stock market mainly owing to budget related developments that the measures to be announced for the new fiscal year would be mostly concentrated on improvement in business climate and reducing cost of the doing business”.

The OPEC and its allied countries’ decision to extend cut for one more month led to a rise in crude oil price, which also helped gained local energy sector to record smart gains, Abbas added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “Budgetary proposals filtering into the market hint that in all likelihood it is going to be an incentive-laden budget, where duties on raw materials may be eased, while a cut expected in federal excise duty will help build rally at the market”.

Recovering regional stock markets coupled with crude oil price reaching month-high prompted investors to book fresh deals in local E&P (exploration and production) stocks, with OGDC, PPL, Pakistan Oilfields, and other stocks giving the index a big upward thrust, Ahmad added.

Shahab Farooq, director research at Next Capital said, “The PSX continued its rally led by banks and E&Ps where higher oil prices fuelled positive sentiments”.

All eyes were set on the expected relief measures to be announced in the upcoming budget, Farooq said. The top gainers were Rafhan Maize, up Rs90, to close at Rs7090.00/share, and Mari Petroleum, gaining Rs26.58, to finish at Rs1,270.17/share. On the other hand, Colgate Palmolive, losing Rs49, to end at Rs2,200/share, and Indus Dyeing, down Rs26.01, to close at Rs520.01/share, were the main losers.

TRG Pakistan Limited had the highest volumes with 19.498 million shares, gaining Rs1.32 to end at Rs28.58/share, while Kot Addu Power’s turnover was lowest with 5.178 million shares and it lost Rs0.27 to end at Rs23.59/share.