Power sector jolts index up on nearing circular debt resolution

The index moved up on Tuesday with revival of investor confidence in power and pharmaceutical sectors amid healthier volumetric gains in cement and oil sectors too, dealers said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 0.72 percent or 331.89 points to close at 46,580.34 points. Volumes decreased 468.062 million shares, from 693.615 million shares on Monday. Similarly, KSE-30 shares index rose 0.99 percent or 190.43 points to end at 19,398.57 points level.

Shahab Farooq, director research at Next Capital, said, “While in a consolidating phase, the market closed positive led by stocks from energy, cement and fertiliser sectors.”

Developments in the resolution of circular debt with Hubco’s joining, higher international oil prices, robust growth in aggregate demand, and upcoming earnings and dividends expectations, fuelled the positive sentiments in the market, Farooq added.

Muhammad Saeed Khalid, head of research at Shajar Capital, said the stock market performed well, marking an intra-day high of 395 points to close at 46,576 points level compared to the previous day.

“Investors accumulated power and oil scrips where updates on power agreement along with the OMCs (oil marketing companies) sales volume numbers, improved investors' sentiments.”

Investors also participated in the pharmaceutical sector mainly on the import of Covid vaccine since the AGP has allowed importing vaccine from more than 15 countries in order to start vaccination trial in Pakistan, Khalid added.

Of 429 active scrips, 209 increased, 202 lost, and 18 remained unchanged.

Salman Ahmad, head of institutional sales at Aba Ali Habib, said, “Index was mainly driven by the economic fundamentals; revenue and exports have shown growth during the seven months of the fiscal year which would translate into the companies’ performance for sure.”

Moreover, market consolidated owing to global stock market performance and rise in crude oil price, which has had a trickle down impact on oil and gas shares. The market closing above 46,500 points level bodes well for the upward journey of the capital market, Ahmad added.

Muhammad Abdur Rafay, research analyst at Pearl Securities, said, “Oil and power sector built momentum, as higher crude prices and an increase in OMC sales by 12 percent YoY in 7MFY21 supported the market sentiment.”

Also, Hubco marked the proposed agreement with the government, whereas negotiations with another group of IPPs led by a business tycoon were in the final stages. “We expect the market to remain volatile, hence, we suggest our investors to remain sellers at higher levels,” Rafay added.

Rafhan Maize, up Rs90.50 to close at Rs10,185/share, and Indus Dyeing, strengthening by Rs42.69 to finish at Rs611.99/share, were the major gainers.

Sapphire Textile, down Rs81.89 to close at Rs1,010.10/share, and Sanofi-Aventis, losing Rs37.17 to close at Rs760.72/share, were the main losers.

Hascol Petrol led volumes with 43,964 million shares. The scrip lost Re0.91 to end at Rs12.69/share. Siddiqsons Tin posted the lowest turnover with 10,058 million shares, with its scrip gaining Re0.58 to end at Rs20.76/share.

Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed bullish at PSX led by oil, banking and cement scrips on surge in global equities and crude oil prices.

Subdued CPI inflation for January 2021 at 5.7 percent YoY affirming SBP policy, strong financial results and reports of 16.28 percent YoY surge in cement sales, and 5.5 percent YoY increase in exports in January 2021 played a catalytic role in the bullish close, Mehanti added.