Stocks hit near 4-month high on financials, E&Ps

Stocks on Thursday reached an almost four-month high led by financial and energy shares, riding a wave of positivity started off by central bank’s easing the refinance rate for export-oriented and other industries to boost economy, dealers said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index strengthened 1.25 percent or 447.28 points to close at 36,142.17 points level and KSE-30 hit a high of 1.57 percent or 243.03 points to end at 15,675.77 points level.

After four months the index has crossed 36,000-mark. The PSX witnessed a traded volume of 467 million shares, which is highest in 147 trading sessions, last seen on December 5, 2019, while traded value also went up by 20 percent day-on-day to $94 million, last observed on April 21, 2020.

Brokerage Topline Securities in a note said, “The market was led by financial and E&P (exploration and production) sectors, while pharmaceutical and cement sectors saw profit taking”.

Investor interest was also observed in technology sector where AVN and NETSOL closed 7.5 percent higher as the sector was doing well given IT service demand increased during the COVID-19 pandemic,” the brokerage said.

Ahsan Mehanti, senior analyst at Arif Habib Corporation, said, “Stocks closed bullish led by scrips across the board as investors weighed rupee stability, and central bank reductions for export refinance rates and deferment of debt repayments for leveraged corporate sector”. Banking sector outperformed of strong business outlook, he said.

“Surging global crude oil, higher local auto, cement and fertiliser prices, led to a bullish close in the earnings season at PSX,” Mehanti added. Of 378 active scrips, 249 advanced, 109 receded, and 20 remained unchanged.

Tahir Abbas, director research at Arif Habib Ltd, said, “It appears that CVOID-19 curve is flattening in Pakistan and that in coming weeks the cases would decline further”. “It is expected that the economic activity will be in the full swing going forward.” Abbas further said with the government’s plan to take every possible step to boost business activity and improve trade to increase exports, various sectors were expected to perform well in the first quarter of this fiscal year.

Shahab Farooq, director research at Next Capital, said, “The benchmark index closed at almost a 4-month high with handsome trading activity, where the traded value also touched an almost 2.5-month high”. He said banks were the major contributors to the gains made on the back of attractive valuations and healthy results expectations, while oil and gas exploration and production sector also gained momentum. Major volumes were however witnessed in second tier stocks, Farooq said.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “The market stayed on the gaining course on the back of strong fundamentals and developments such as a cut in the refinance rate for the existing companies that will help them expand and boost export oriented sector”.

He said the decline in COVID-19 cases and anticipation of a hike in the cement price also helped the sentiments.

“Furthermore, owing to technical factors market showed recovery as it crossed 35,000 points level after resisting it for long,” Ahmad added.

The top gainers were Nestle Pakistan, gaining Rs100.84 to close at Rs6,800.84/share, and Hinopak Motors, up Rs32.59 to finish at Rs467.16/share, while Unilever Foods, down Rs90 to close at Rs9,500/share, and Premier Sugar, losing Rs49.70 to close at Rs612.97/share, were the main losers.

Unity Foods Limited posted the highest volumes with 40.652 million shares and gained Rs1 to end at Rs12.75/share, while Fauji Foods Limited posted thinnest turnover with 11.745 million shares, gaining Rs0.31 to end at Rs10.77/share.