Financials push PSX above 35,000 points’ level

Stocks on Wednesday closed above 35,000 points in pre-budget rally led by financials, while reports that the government and the ‘lender of the last resort’ have found a sweet spot in their negotiations, also underpinned the sentiments, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index strengthened 0.75 percent or 261.48 points to close at 35,065.08 points and its KSE-30 followed suit with a high of 0.81 percent or 123.40 points to end at 15,311.81 points level.

Topline Securities in a note said, “Investors reacted to the news that an agreement seems to have been reached between the government and the IMF (International Monetary Fund) on freezing the size and expenditures of the federal government for the budget FY21”.

The brokerage said financials led today’s momentum where BAFL closed at its upper circuit, while UBL, HBL, and MEBL were also up from the sector. “Meanwhile investors interest was also seen in pharmaceuticals, where GSKCH closed at its upper limit,” Topline report said. Analyst Ahsan Mehanti from Arif Habib Corporation said, “Stocks closed bullish led by select cement, banking and textile scrips on strong valuations”.

Resolve over IMF-Pakistan second review talks on $4.95 trillion federal budget target on revenue, expenditure freeze, reports on recovering textile, cement exports and $500 million ADB loan approvals for pandemic relief boosted the sentiment, Mehanti added.

Of 371 active scrips, 199 went up, 152 down, and 20 ended neutral. The ready market volumes stood at 218.656 million shares, as compared to 238.282 million shares in the previous session.

Tahir Abbas, Head of Research at Arif Habib Limited, said, “The budget is around the corner and investors are expecting the government to announce several measures to support the economy following pandemic, which led to negative growth in the country’s GDP after more than six decades”. Furthermore there has been market talk that facilitating export sectors, the government might reduce GST on textile sector as the delay in the refund issue is badly hurting the working capital. The development would ease off the liquidity issues facing by the textile sector, Abbas added.

Saad Rafi, head of equity sales at Al Habib Capital Markets, said, “Positive vibes heralded in the market after index closed above 3,5000 level as before that mostly the index had been for a long time moving in a band of 33,500 to 34,500 points".

Rafi said the banks performed well as the shares of this sector were bit depressed since Friday, owing to market rumors that central bank was likely to cut the interest rate. “However, till now nothing has happened that could create any room for some improvement and in the near term the chances of any trimming could be ruled out”.

With the COVID-19 cases rising and a warning from WHO (World Health Organization) to close down businesses or go for another lockdown, the economy was likely to remain dull and government might miss the first quarter revenue target for the new fiscal year, Rafi added.

Sapphire Fibre, securing Rs51.14 close at Rs736.15/share, and Sapphire Textile, gaining Rs50.66 to finish at Rs850.67/share emerged as the top gainers, while Nestle Pakistan, losing Rs40 to close at Rs6,650/share, and Sanofi-Aventis, shedding Rs33.99 to close at Rs840.00/share, were the main losers. Pakistan Refinery was the highest volume-maker with 11.680 million shares and gained Rs0.02 to end at Rs2.55/share. On the other hand, Hum Network, with 5.253 million traded shares, recorded the lowest turnover and secured Rs0.01 to close at Rs13.22/share.