Stocks break plateau, latching on to oil rally

Stocks on Friday broke a weeklong plateau supported by mostly oil, fertilisers, and banks, while sentiments got a boost after the passage of FATF-related bills and a stay on $6 billion penalty in Reko Diq case, dealers said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 0.4 percent or 170 points to close at 42,504.76 points. Volumes increased to 516.126 million shares, compared with 508.691 million on Thursday.

A A Soomro, Managing Director KASB Securities, said, “The KSE-100 has begun the upward nudge”.

He said investors seemed to have regained some confidence after the passage of FATF-related bills, positive statement by Chinese envoy on Pakistan’s likelihood of getting out of the dreaded grey list, and a relatively muted second wave of the coronavirus cases. “Nonetheless, we hope second COVID-19 wave’s impact will not be as devastating as the first one, albeit the market propellants look much stronger for next few months,” Soomro added. Trading activity was recorded in 417 active scrips, of which 184 increased, 210 lost, and 23 remained unchanged.

Topline Securities in a note said, “Range-bound activity was observed in the market as the index traded between an intraday high of 220 points and an intraday low of -100 points”.

Major positive contribution to the index came from OGDC, UBL, FFC, MEBL and POL, whereas DAWH, KAPCO, PAKT, EPCL and LUCK lost value to weigh down the index, the brokerage added.

KSE-30 shares index followed suit with a high of 0.57 percent or 102.45 points to end at 18,046.26 points level.

Analyst Ahsan Mehanti from Arif Habib Corporation said, “Stocks made a recovery amid higher trades led by selected scrips across the board supported by a surge in global crude oil prices and speculations on likely monetary policy status quo next week”.

China’s expressing confidence over Pakistan’s likely exit from FATF grey list in October review, upbeat FDI data for July-August, rupee stability and World Bank ICSID’s stay over $6 billion Reko Diq penalty dispute led to a bullish close, Mehanti added.

Foreign direct investment (FDI) in Pakistan jumped 40 percent to $226.7 million in the first two months of the current fiscal year of 2020/21 as overseas investors are encouragingly betting on economic recovery from the five-month of downturn, analysts said.

Fahad Rauf, deputy research head at Ismail Iqbal Securities said, “Equities stayed volatile due to lack of triggers”. “China's confidence in a successful FATF review for Pakistan improved sentiment, while spillover effects from declining global markets restricted the upside.”

E&P (exploration and production sector) along with banks and fertilisers added 158 points to the index cumulatively, Rauf said.

The FATF placed Pakistan on the grey list in June 2018 and placed 27 conditions for review for complying in one year till September last year. Pakistan was so far given three extensions of three months each, every time to comply with 27-point action plans.

The top gainers included Nestle Pakistan, up Rs112.32 to close at Rs6,993.33/share, and Sapphire Fibre, up Rs30.36 to finish at Rs706.37/share, while Premier Sugar, down Rs40 to close at Rs510.00/share, and Pakistan Tobacco, losing Rs30 to finish at Rs1,700/share, led the losers.

With 75.507 million shares Pakistan International Bulk was on the top of the volumes chart, up Rs0.63 to end at Rs13.98/share, whereas Power Cement with 11.528 million traded shares was at the bottom, and it lost Rs0.25 to end at Rs9.42/share.