Stocks rise in pre-result rally

Stocks on Monday basked in the promising glow of central bank’s monetary status quo, mostly disregarding rollover concerns, amid big bets of bountiful earning results, dealers said.

KSE-100 Shares Index, the benchmark of Pakistan Stock Exchange (PSX), rose 0.48 percent or 219.60 points to close at 46,087.64 points. Volumes increased 470.060 million shares, from 430.628 million on Friday. KSE-30 also secured 0.55 percent or 104.54 points to end at 19,165.52 points. Out of 414 active scrips, 226 increased, 166 lost, and 22 remained unchanged.

Topline Securities in its daily market review said equities started the rollover week on a positive note, shrugging off worries over an all-time high leverage position of Rs41.17 billion (Rs22.8 billion open position in the futures counter).

AGP closed at its upper circuit amid reports of its clearance to market/distribute a COVID-19 vaccine developed by a Russian pharmaceutical, the brokerage said adding, while leveraged sectors such as cement and steel saw renewed investor interest due to monetary policy status quo.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities said the market closed above 46,000 points, after central bank in its monetary policy statement indicated the interest rate might remain unchanged in the near term, which helped boost sentiment.

“The market is in a positive mood betting on corporate results, expected to outperform last 20 years announcements as the last quarter will likely be much better compared to nine months because of the pandemic that had slashed sales and profits during that period, Ahmad added.

Muhammad Saeed Khalid, head of research at Shajar Capital said the stock market reacted positively mainly cheering a neutral monetary policy announcement on Friday.

The benchmark index outperformed mainly on the expectations of lower NCPI (national consumer price index) inflation numbers for January 2021, where investors accumulated the zero-rated stocks to mark capital gains ahead of mush awaited Textile Policy, he said.

Khalid added that investors also bought in cement and fertiliser stocks mainly on higher off-take numbers.

Shahab Farooq, director research at Next Capital said, the market draw strength after central bank kept the policy rate unchanged with forward guidance of stable interest rates in the near-term with gradual adjustments to achieve positive real interest rates afterwards.

“Positive sentiments were seen in cements, steels, and IPPs, that have reached agreements while some profit-taking was witnessed in index heavyweights amidst the future rollover week”, Farooq added.

Analyst Ahsan Mehanti from Arif Habib Corporation said stocks showed recovery in the earnings season rally led by selected scrips across the board on as investor weighed SBP status quo in the key policy rate announcement.

Upbeat LSM numbers, higher auto, petroleum, and cement sales for July-December 2020,

expectations for over $28 billion remittances in FY21 and reports of robust Roshan Digital Accounts response turned the bulls on at the PSX, Mehanti added.

Pakistan Tobacco, up Rs48.24 to close at Rs1,649.99/share, and Bhanero Textile, strengthening by Rs43.90 to finish at Rs870/share, were the major gainers. Nestle Pakistan, down Rs155 to close at Rs6,420/share, and Mari Petroleum, losing Rs17.89 to close at Rs1409.19/share, were the worst losers. K-Electric Limited led volumes with 36.610 million shares, while Avanceon Limited posted the lowest trade with 12.037 million shares.