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January 27, 2021

Stocks extend gains on high earning hopes


January 27, 2021

Stocks extended gains on Tuesday holding on to hopes of healthy profit numbers for the quarter ended December 31, 2020 in cement, auto, technology, steel, and pharmaceutical sectors, dealers said.

The KSE-100 shares index gained 0.43 percent or 199.74 points to close at 46,287.38 points at Pakistan Stock Exchange (PSX). Ready market volumes increased 603.240 million shares, from 470.060 million on Monday. KSE-30 shares index was up by 0.49 percent or 93.48 points to end at 19,259.00 points. Of 413 active scrips, 199 gained, 203 lost, and 11 remained unchanged.

Topline Securities in a note said the index continued to find support at the 46,000 points level. On the results’ front FFBL posted a below than expected unconsolidated CY21 EPS of 2.12 as compared to an LPS of (5.72) in CY20 after which the stock succumbed to selling pressure and closed down 3.73 percent for the day, the brokerage added.

Traded value (regular + future) at PSX increased by 20 percent day-on-day to Rs45.7 billion ($284 million), highest in 13 years excluding MSCI EM inclusion day back in 2017. Traded volume also increased by 20 percent day-on-day to $882 million shares.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities said stocks had rallied in the last two session on the back of earnings announcements, expected to be higher than the last quarter and the same quarter of 2019, owing to economic recovery.

Moreover, the period from March to September 2020 was quite dull, where several sectors recorded minus growth because of pandemic led economic lockdown, he said.

Ahmad added that however, with the opening of industries, and growth recorded in export-oriented industries, LSM also landed in positive territory, giving encouragement to investors at large.

Muhammad Saeed Khalid, head of research at Shajar Capital said investors remained bullish in the tech and cement industry stocks, mainly on the expected announcement of industry sales volume.

The index marked an intra-day high of 311 points during the day mainly on the bullishness in the cement and textile industry stocks, he said.

“We also noticed robust activity in oil scrips ahead of OMCs sales volume umbers announcement along with a rise in world crude oil prices,” Khalid added.

Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed higher amid high trades led by oil, fertiliser, and cement scrips on speculations in the earning season.

SBP policy rate status quo, strong financial results in fertiliser sector, receipts in Roshan Digital Accounts, flows in capital markets, and surging global crude oil prices contributed to the rally, Mehanti added.

Zaid Aftab, research analyst at Pearl Securities said some interest was seen in the cement sector after prices in the Northern region increased by Rs5/bag.

“We expect the market to move both ways amid rollover week. Hence, we suggest investors to keep booking profits at higher levels,” Aftab added.

Colgate Palmolive, up Rs75.01 to close at Rs3,175/share, and Nestle Pakistan, strengthening by Rs50 to finish at Rs6470/share, emerged as the top gainers of the day.

Rafhan Maize, down Rs390 to close at Rs10,500/share, and Mitchell’s Fruit Farms, losing Rs32.56 to close at Rs439.15/share, suffered the most losses in Tuesday’s session.

JS Bank Limited ended the day as the volume leader with 65.348 million shares, while Power Cement was the least traded stock with 17.355 million shares.