Index posts fresh rally on strong valuations in cement, energy scrips

Market witnessed fresh rally on Wednesday as investors resumed their interest in cement, fertiliser, and oil and gas scrips spurred by strong valuations and positive news from the construction sector, dealers said.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Stocks closed bullish amid high trades in the earnings season rally at PSX, led by cement, oil and fertiliser scrips on strong valuations.”

Surging global crude oil prices, upbeat data for cement sales (up 41 percent in July 2020), 5.8 percent increase in export numbers, and reports of rising fertiliser sales played a catalytic role in the bullish close, Mehanti added. Pakistan Stock Exchange (PSX) KSE-100 shares index gained 0.77 percent or 305.16 points to close at 39,882.78 points level. KSE-30 shares index followed suit with a high of 0.8 2 percent or 140.18 points to end at 17,297.71 points level.

Of 405 active scrips, 248 moved up, 139 retreated, and 18 remained unchanged. The ready market volumes stood at 501.945 million shares, as compared with the turnover of 593.981 million shares in the previous session.

Shahab Farooq, director research at Next Capital said, “Benchmark KSE-100 index while opening on a volatile note witnessed buying during the later hours of the day.” Cement sector led the rally, where reports of Rs5-7/bag increase in prices acted as a trigger. Select banking and oil and gas stocks also attracted investors’ interest. “Volumes continue to remain very healthy where equities continue to be the preferred asset class of investors,” he added.

Muhammad Saeed Khalid, head of research at Shajar Capital said despite the unveiling of a political map for Pakistan by Prime Minister Imran Khan, investors remained sluggish earlier during the day. This sluggish activity as resulted in profit-taking activity.

Fragility was also observed due to initiation of crackdown by FIA against sugar mill owners. “Investors made capital gains in banking, sugar, fertiliser, and food stocks,” Khalid added.

Arif Rehman, head of research at Fortune Securities, said initially, the market was range-bound; however, it rebounded later in the day on back of rally in cement sector, where most stocks went towards the end of their limit.

Probable reason was the positive outlook of the sector, backed by improved dispatch numbers for July and bullish outlook given PM’s construction package, Rehman added.

Salman Ahmad, head of institutional sales said continuous support from financial institutions was witnessed, which showed that market has liquidity, while some key companies saw buying spree.

Umair Naseer from BMA Capital Management said, “We anticipate the market to continue its bullish trend going ahead, where upcoming financial results for banking sector will further set the direction.”

Top gainers were Premier Sugar, gaining Rs35.46 to close at Rs508.26/share, and Sanofi-Aventis, up Rs34.50 to finish at Rs868.00/share, while Pakistan Tobacco, down Rs48.99 to close at Rs1,626.01/share, and Nestle Pakistan, losing Rs40.00 to close at Rs6,410.00/share, were the main losers.

Maple Leaf posted the highest volumes with 38.479 million shares, but gained Rs2.28 to end at Rs35.03/share. Fauji Cement turnover was the lowest with 15.916 million shares, whereas the scrip gained Re0.68 to end at Rs21.68/share.