Index up 1pc as March inflation falls within expectation

The index climbed one percent on Wednesday, as inflation rate for March came in line with expectation, and provincial governments allowed some industries to resume business, dealers said.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Stocks closed higher on investor speculation ahead of quarterly earnings season and upbeat data on CPI inflation at 10.2 percent for March 2020.”

Reports on rupee stability, recovery in global crude oil prices, and expectations for receipt of the International Monetary Fund (IMF) economic relief played a catalytic role in the bullish close, Mehanti added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 0.94 percent or 273.94 points to close at 29,505.57 points level. KSE-30 shares index followed suit with a high of 0.47 percent or 60.08 points to end at 12,921.30 points level.

Of 358 active scrips, 214 moved up, 122 retreated, and 22 remained unchanged. The ready market volumes stood at 193.711 million shares, as compared with the turnover of 221.865 million shares in the previous session.

Samiullah Tariq, director research at Arif Habib, said, “Receding of inflation rate for the second consecutive month, though it was in line with the expectation and fallen yields of long-term bonds, made valuation quite attractive.” The sentiment was boosted by the decision of provincial governments in Punjab and Sindh to allow some industries to start functioning, Samiullah added.

The market had opened slightly negative, however a few blue chips, including Mari Petroleum, MCB Bank, Engro, and United Bank Limited contributed to major gains. As some industries resumed their activities with limited staff, it helped the market moved in a positive direction, an analyst said.

Faisal Shaji, strategist at Standard Capital, said, “Sentiments remained mixed with investors puzzled over lockdown or no lockdown amid federal government's lack of a firm policy.” Globally, covid-19 deaths were increasing, which indirectly impacted the Pakistani market which has an extremely small investor base, Faisal added. Salman Ahmad, head of institutional sales at Aba Ali Habib said “The attractive price to earnings levels led to some fresh buying in patches, global markets were mostly mixed, however uncertainty owing to the virus still hurts investors’ mood.”

Investors want to see how the government handles the situation with international financial institutions that might help raise funds to plug revenue shortfalls, eroding foreign investment, and loss in business activities.

Moreover they also want the government to act fast upon the Financial Action Task Force issues and debt relief, he added. Fahad Rauf, deputy director research at Ismail Iqbal Securities, said, “Equities remained bullish despite rapid rise in confirmed covid-19 cases. March inflation number also came in-line with market expectations.”

Banks, fertilisers, autos and E&Ps led the index gains, cumulatively adding 176 points, Fahad said. The top gainers were Mari Petroleum, up Rs59.56 close at Rs950.66/share, and Indus Motor Company, up Rs54.71 to finish at Rs784.24/share.

Nestle Pakistan, down Rs100.00 to close at Rs6,600.00/share, and Sapphire Fibre, down Rs32.99 to close at Rs541.01/share, were the main losers.

Maple Leaf recorded the highest volumes with a turnover of 24.646 million shares. Its scrip gained Re0.35 to end at Rs21.07/share. The lowest volumes were witnessed in Bank of Punjab, recording a turnover of 4.335 million shares, whereas its scrip lost Re0.12 to end at Rs7.54/share.