Stocks extend rally on inflows strength

Stocks extended rally on Friday drawing strength from dovish monetary policy assurance for the near future, receipt of Eurobond proceeds, and strong reserves position, dealers said.

Pakistan Stock Exchange’s (PSX) KSE-100 Shares Index gained 0.99 percent or 445.12 points to close at 45,186.48 points.

KSE-30 Shares Index gained 0.83 percent or 152.7 points to close at 18,484.91 points.

Topline Securities in a note said the positivity could be attributed to State Bank of Pakistan chairman statement that interest rate would remain sticky at current level in near future.

Major contribution to the index came from TRG, POL, SYS, UBL and NRL, as they cumulatively contributed 224 points to the index, the brokerage said.

Investor morale ran high as volumes swelled to 688.03 million shares from 383.105 million in the last trading session.

Ahsan Mehanti at Arif Habib Corp said stocks rallied as investor weighed IMF affirmation on availability of projected external financing needs in FY22, receipts of $2.5 billion Eurobonds, and surge in foreign exchange reserves to over $16 billion.

Easing political noise and rupee stability were instrumental to the bullish close at the PSX, Mehanti added.

Among 404 active scrips there were 286 advancers, 107 losers and 11 were neutral.

An analyst at Arif Habib Limited said market inched up further from the recent run-up, adding round about 1,500 points on the table.

“Tech, refinery, cement, steel, energy, and oil marketing companies contributed to the positivity. Result expectations are helping cement and steel sector stocks go up and improvement in investor sentiment triggered other sectors,” the analyst said.

A A H Soomro at KASB Securities said market preferred to remain green following the receiving of $2.5 billion from the Eurobond issuance and the government’s prepping for the new package with IMF.

“Expectations are abound the government would extract negotiations in the IMF package -specifically tariffs for electricity and sharp hike in tax rates,” he said.

“Fearing political damage of abrupt hikes, government seems to be securing relaxation just at the time of third wave of Covid.”

“It seems market is pricing in the growth and IMF's renegotiations more than the Covid cases as national lockdown is out of question,” Soomro said.

On the corporate front, Board of Directors of ENGRO (down 3.1 percent) approved an amount of up to $31.4 million towards conducting engineering, design and technical studies including a Front End Engineering Design study in relation to the PDH-PP Project.

Analysts believe investors seem to be accumulating for a rally. Although, some share prices are still below the recently achieved peaks. April’s earnings seasons would show a sharp earnings rebound for sure, they added.

“Compounded with SBP's broad indication of lower interest rates and currency stability, there is no short term material risk at play to the economy,” an analyst said.

Sapphire Textile, up Rs60.07 to close at Rs861.07/share, and Nestle Pakistan, up Rs49 to close at Rs5,849/share, were the best gainers of the day.

Indus Motor Company, down Rs12.47 to close at Rs1,10971.18/share, and Imrooz Modaraba, down Rs11.02 to end at Rs139.76/share were the worst losers.

Worldcall Telecom led volumes with 124.48 million shares, followed by Telecard Limited with 60.21 million shares, and Byco Petroleum that saw a trade of 50.2 million shares.