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September 30, 2020

Stocks rebound on value-hunting

Business

September 30, 2020

Stocks on Tuesday recovered some of the recent losses on value-hunting with active institutional support amid hopes that ADB-funded market reforms would add to the stability of the market, dealers said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 1.14 percent or 463.41 points to close at 41,204.36 points, while volumes decreased to 353.650 million shares, compared to 407.194 million on Monday.

AA Soomro, managing director at KASB Securities, said, “The market rejuvenated finally as expected. The dips, yo-yoing, and bleeding has finally stopped as investors realised the worth of stock on the screen”.

Many had anticipated that the leveraged investors would be force-selling at the end of the month of September; however, the sharp reversal in the intra-day movement in the afternoon has given the confidence back to investors, he said.

Soomro added that barring any black-swan event, “we can safely expect the correction to be behind us now, as next week onwards positive reams of data pour in on economy, stocks, and market dynamics”.

“These very risks are worth taking. Expect the market to uptrend now onwards as a lot of liquidity has started chasing limited number of stocks,” he said. KSE-30 shares index followed the suit with a high of 1.27 percent or 218.66 points to end at 17,470.17 points level. Taimoor Asif, senior research analyst at Next Capital, said, “The selling pressure continued, which opened up valuations”. Moreover, the reports of cement dispatches improving in September supported the market, which registered a significant recovery towards the end of the session, Asif added. Trading activity was recorded in 412 active scrips, of which 277 ended higher, 115 lower, and 20 were unchanged.

Muhammad Saeed Khalid, head of research at Shajar Capital, said, “Capital market that saw a 1,000 points intraday crash after Shahbaz Sharif’s arrest recovered some of the losses”.

“The index performed robustly, marking a high of 700 points during the day, mainly on strong buying seen in HASCOL, PRL, AVN, and TRG mainly on fundamental reasons,” Khalid added. Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, "For the last over five days the market was under pressure owing to future settlement and political noise, which made several valuations quite attractive”.

“With the settlement of future contracts and badla which carries high volumes compared to previous settlements, index recovered sharply on technical grounds,” Ahmad added.

Analyst Ahsan Mehanti from Arif Habib Corporation said, “Stocks showed sharp recovery led by selected scrips across the board amid rebounding global equities, higher global crude oil prices, and ADB approval for $300 million policy based loan for capital market reforms”. Reports on provisional data depicting a surge in cement offtake by 16 percent YoY in September 2020, $805 million current account surplus for Jul-Aug ‘20 and a likely resolve over Rs517 billion GIDC levies led to a bullish close, Mehanti added.

Mari Petroleum, securing Rs34.09 to close at Rs1353.19/share, and ICI Pakistan, up Rs32.34 to finish at Rs711.60/share, were the highest gainers of the day, while Nestle Pakistan, down Rs90 to close at Rs6,700/share, and Sapphire Textile, losing Rs69.59 to close at Rs858.40/share, ended up as top losers.

With 50.223 million shares, Hascol Petrol ruled the volumes chart, up Rs1.2 to end at Rs21.70/share, whereas Fauji Foods Limited saw the thinnest trade with 9.612 million shares, but gained Rs0.31 to end at Rs16.45/share.