PSX up on value-buying; foreign funding hopes help

Stocks on Monday swelled on value-buying by big investors that weighed reports that fresh foreign loans and some debt rescheduling by donor nations are in the offing to help support balance of payment position, dealers said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 0.89 percent or 298.97 points to close at 33,737.92 points level. KSE-30 shares index followed suit with a high of 1.23 percent or 177.80 points to end at 14,617.26 points level.

Topline Securities in a report said, “The market witnessed volatile trading session as in the initial hours KSE-100 Index made an intraday low of 367 points; however, stocks made an impressive recovery on value-buying mainly from local institutional investors”.

“Oil stocks led early gains as higher global crude sparked investors interest with the sector closing 1.6 percent higher, while other key sectors including fertilisers and banks joined the rally later,” the brokerage report added.

Analyst Ahsan Mehanti from Arif Habib Corporation said, “Stocks showed recovery led by oil, banking, and cement scrips amid higher global equities and global crude oil prices”.

ADB approval for a $500 million loan under COVID-19 support also boosted the sentiments. “Rs650 billion PSDP proposed in the federal budget FY21 announcement, GDP growth target of 2.1pc 6.5pc low inflation target for FY21 and rupee stability amid G20 debt payment relief led to the rise of bulls at the PSX,” Mehanti added.

Of 357 active scrips, 146 went up, 190 retreated, and 21 remained unchanged. The ready market volumes improved to 161.290 million shares, compared to 105.898 million in the previous session.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities said, “The market turned positive after weeklong selling pressure on back of the reports that Asian Development Bank is expected to give $1.5 billion in assistance to Pakistan and some countries are willing to reschedule debt amounting $2.4 billion, which sparked a rally at the local capital market”.

Market was under pressure after Akhtar Mengal-led BNP’s exit from the coalition, but it appeared the government would soon resolved the issue, boosting sentiment for the market players, Ahmad said.

Zia Shaafi, senior investment advisor at Intermarket Securities, said the market showed lackluster performance because at the closing of the fiscal year, banks and other financial institutions were reluctant to lend funds to reshape their balance sheets.

“Furthermore, it appears the market has been in search for some positive developments for some rally and we are advising investors to adopt ‘buy on dips’ strategy. Moreover, in July, we are expecting some positive rally on back of some positive news from the economic front,” Shaafi added.

Faizan Munshey, head of foreign institutional sales at Next Capital said, “The value-buying at lower levels helped Index to close on positive note”.

However, at the opening the market continued its last week’s trend, where index suffered a decline of more than 1,200 points, Munshey added.

The top gainers were Pakistan Tobacco, up Rs57 to close at Rs1,590/share, and Sapphire Fibre Rs48.37 to finish at Rs693.38/share. Sapphire Textile, down Rs54.01 to close at Rs681/share, and Nestle Pakistan, losing Rs51.74 to close at Rs6448.26/share, were the main losers.

Unity Foods Limited recorded the highest volumes with 11.539 million shares, but lost Rs0.07 to end at Rs11.34/share.

Bank of Punjab with 4.117 million shares recorded the least volumes, whereas the scrip gained Rs0.06 to end at Rs8.44/share.