Stocks off lows as energy, power look sharp

Stocks on Tuesday bounced back from back-to-back lows, lifted mainly by energy with power playing a supporting role, amid hopes of high-rewarding earnings results for the quarter ended December 31, 2020, the dealers said.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 shares index gained 0.39 percent or 176.55 points to close at 45,903.23 points. Volumes decreased to 491.787 million shares, from 543.645 million shares on Monday. KSE-30 shares index also rose 0.7 percent or 132.91 points to end at 19,152.66 points.

Topline Securities in a research note said, energy sector saw renewed investor interest amidst news reports that the Power Division has proposed to the ECC for allowing MARI to remove cap for dividend distribution after which the stock closed at it upper circuit.

The Power sector also saw increased investor interest owing to market chatter that HUBC will receive around Rs70 billion out of the first tranche of Rs150 billion, which resulted in the stock to close at 87.46 (up 3.92 percent).

Salman Ahmad, head of institutional sales at Aba Ali Habib, said, “The index is facing resistance near 46,000 points level but it is quite encouraging it has been 100 points short”.

He said encouraging developments such as healthy corporate financial results might help index move higher in the coming days; however, the some selling pressure was likely to build with the commencement of rollover week.

Muhammad Saeed Khalid, head of research at Shajar Capital said stocks remained within the range of 45,500 and 46,000 points mainly owing to uncertainty over the inflation rates for January 2021.

The investors also remained uncertain on the textile policy, he said.

"We witnessed strong participation in the tech and textile scrips where investors accumulated on the expected announcement of textile policy,” Khalid added.

Of 425 active scrips, 196 ended higher, 210 lower, and 19 closed neutral.

Analyst Ahsan Mehanti from Arif Habib Corporation said stocks showed recovery in the earnings season rally led by selected scrips across the board as investors weighed higher global equities and recovery in global crude oil prices.

Mid-session pressure remained owing to worries over Rs24.11 trillion government debt and uncertainty over SBP policy announcement later this week.

Upbeat data for LSM growth, auto, POL sales and cement sales for Jul-December 2020, and reports of $1.4 billion robust growth of 22.7 percent in textile exports for December 2020 led to a bullish close, Mehanti added.

Muhammad Jawad Vohara at BMA Trading Desk said, the benchmark index rose where Mari Petroleum gained 7.5 percent, closing at its upper circuit at Rs1452.77 on reports that Petroleum Division had recommended ECC to remove cash payout restrictions.

The market was continuously trading in a narrow range after a good run-up since the beginning of this calendar year, he said.

"We will see more bullish momentum near upcoming corporate earnings of Q2 FY21,” Vohra said and added, "We prefer banks, cement, fertiliser and conglomerates to capitalise on attractive valuation”.

Rafhan Maize, up Rs389.99 to close at Rs9,989.99/share, and Nestle Pakistan, strengthening by Rs145 to finish at Rs6,600.01/share, ended the day with highest gains.

Colgate Palmolive, down Rs50 to close at Rs3,100/share, and Sapphire Textile, losing Rs35 to close at Rs1,014.99/share, took the biggest hits.

TRG Pakistan Limited led volumes with 29.407 million shares. The scrip gained Rs5.07 to end at Rs108.56/share. Power Cement posted the lowest turnover with 13.413 million shares, and gained Rs0.16 to end at Rs11.37/share.