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Stocks extend gains on fewer new COVID-19 cases

Business

July 9, 2020

Stocks extended their winning streak for the eighth consecutive session on Wednesday on renewed interest from the financial institutions while flattening COVID-19 curve also helped, dealers said

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 0.91 percent or 321.54 points to close at 35,694.89 points, while KSE-30 followed suit with a high of 0.99 percent or 151.45 points to end at 15,432.74 points level.

Analyst Ahsan Mehanti from Arif Habib Corporation said, “Stocks closed bullish amid speculations in the earnings season and reports of reduction in central bank refinance rates under temporary economic refinance financing of textile and LTFF (long-term financing facility) of nontextiles exports”. State Bank of Pakistan’s deferment of debt repayments for leveraged corporate sector till September 30, surging local auto, fertiliser prices, upbeat cement sales, exports in June, shrinking FY20 trade deficit, and higher global crude oil prices gave PSX a big push, Mehanti added.

Of 378 active scrips, 236 went up, 120 down, and 22 closed without any change. Volumes stood at 317.691 million shares, compared to 333.891 million shares in the previous session.

Fahad Rauf, deputy research at Ismail Iqbal Securities, said, “The selective buying was witnessed in the sectors, where development flows helped build a rally”. Like cement sector showed gains after Razzak Dawood, advisor to Prime Minister on trade and commerce said DG Khan Cement had received an order from Philippines, he added. Rauf said, textile company had also received an order from Hugo Boss for some sportswear.

Zia Shafi, senior investment advisor at Intermarket Securities, said, “The market exhibited healthy activity due to institutional interest, following the government’s decision to impose restriction in investing in National Saving Schemes”.

He said the index remained mostly in the bullish frame of mind on expectation the COVID-19 curve was flattening in Pakistan, which would trigger economic activity in the country and accelerate pace of export orders, helping improve overall inflows, Shafi added. Tahir Abbas, director research at Arif Habib Limited, said “A slowdown in reporting of new novel coronavirus cases along with lower infection ratio and decline in daily cases, improved the overall sentiment”.

Since last couple of sessions “we are witnessing fresh deployment of funds from local financial institutions, which are shifting from fixed income to equity market, helping the index to stabilise, Abbas added. Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “A couple of positive happenings help build another rally at the local capital market”.

He said reports that globally and domestically COVID-19 cases were falling with international markets coming out of the lockdown to revive economy.

“Another reason which helped improve sentiments was developments like improved cement exports in June and several companies receiving fresh orders, while arrival of funding from multilateral international agencies also added to the momentum,” Ahmad added. The top gainers were Unilever Foods, gaining Rs90 to close at Rs9,590/share, and Indus Motor Company, up Rs46.54 to finish at Rs1164.76/share, while Rafhan Maize, down Rs215 to close at Rs7,125/share, and Nestle Pakistan, losing Rs50 to close at Rs6,700/share, were the main losers. TRG Pakistan Limited posted the highest volume with 38.340 million shares and gained Rs2.36 to end at Rs35.65/share. Avanceon Limited’s turnover was the lowest with 7.019 million shares, whereas the scrip gained Rs3.05 to end at Rs43.72/share.