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Stocks pick up as govt prepares to dent circular debt


January 5, 2021

Stocks picked up on Monday driven by positive developments towards resolution of power sector circular debt issue, but profit-taking around a key psychological level capped the gains, while rising crude oil led a sentimental boost, dealers said.

Topline Securities in a note said equities opened the week on a bullish note with the benchmark KSE-100 Index posting an intra-day high of 45,074 (up 1.44 percent).

However, the market closed the day at 44,686 points, up 0.57 percent or 251.66 points, owing to some profit-taking when the

market breached the 45,000 points’ psychological level, the brokerage added.

“The power and OMC (oil marketing companies) sector remained in the limelight amid reports that the federal government has given consent to pay the agreed amounts to clear the dues of IPPs (Independent Power Producers) in three installments within one year.”

As a result, the brokerage said, KAPCO closed the day at its upper circuit, while HUBC closed 5.55 percent higher and PSO gained 7.12 percent to end at Rs247.93.

Investor sentiment was also boosted in the textile sector

amid an 18.3 percent month-on-month jump in export figures after which NML secured 5.86 percent to close at Rs112.24, Topline report said.

Tracking the benchmark index, KSE-30 also hit a high of 1 percent or 186.19 points to end at 18,770.20 points. Of 412 active scrips, 161 advanced, 231 slipped, and 20 remained unchanged.

Muhammad Saeed Khalid, head of research at Shajar Capital said the index performed mainly on the power sector where stocks largely remained bullish ahead of the first tranche of the circular debt by the government, he added.

Khalid said investors sold scrips in automobile, technology and refineries, while mutual funds net-bought mainly in the Nishat Group stocks where they remained bullish on investment income from associated companies.

Investors also accumulated heavily mainly on the lower NCPI (National Consumer Price Index) inflation that reduced the chances of higher inflationary pressures in the economy, Khalid added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities said the market closed on a positive note but the trend was mostly mixed as several sectors came under selling pressure due to institutional profit-taking.

“Overall sentiment has been strong as all the key indicators have performed well. With exports growing, remittances rising, and rupee stable, the market in long run, after a few adjustments, is likely to be upbeat,” Ahmad added.

Ahsan Mehanti from Arif Habib Corporation said stocks closed record higher led by selected scrips across the board amid upbeat data on CPI Inflation for December 2020, surging global equities, crude oil prices and government decision for one year extension of construction sector amnesty package.

Easing political noise and expectations on likely resolution of circular debt crisis and speculations ahead of financial results due this week led to bullish close, Mehanti added.

Nestle Pakistan, up Rs72.50 to close at Rs6,700/share, and Bata Pakistan, strengthening by Rs38.47 to finish at Rs1549/share, were the major gainers.

Millat Tractors, down Rs25.16 to close at Rs1,072.30/share, and Jubilee Life Insurance, losing Rs25.13 to close at Rs360.87/share, were the main losers.

Pakistan Elektron led volumes with 27.367 million shares. The scrip gained Rs1.74 to end at Rs40.87/share. Jahangir Siddiqui & Company posted the lowest turnover with 12.677 million shares, and lost Rs2.45 to end at Rs30.26/share.