Stocks snap back under E&Ps lead; global recovery helps

Stocks snapped back on Tuesday as a rebounding crude oil gave energy shares an upward thrust amid a sharp recovery in global markets that cheered easing lockdowns across the world as well as a successful test-run of a COVID-19 vaccine, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 1.05 percent or 353.58 points to close at 34,158.55 points, while KSE-30 hit a high of 0.83 percent or 123.17 points to end at 14,923.03 points level.

Of 357 active scrips, 182 advanced, 151 retreated, and 24 remained unchanged. The ready market volumes stood at 247.798 million shares, as compared with the turnover of 261.966 million shares in the previous session. Saad Rafi, head of equity sales at Al Habib Markets, said the market was mostly driven by sector related developments.

“Energy shares led the show in terms of increased volumes and values, following a significant rise in the crude oil price,” Rafi said

Moreover, he added that pharmaceuticals rallied with several companies hitting the upper deck, because of the market talk that after Ferozsons, more companies might get contracts to manufacture an anti-coronavirus drug. However, interest from high net worth and individuals lifted most of the deals sold by the foreign investors which boosted the overall sentiment at the market, Rafi added.

Sateesh Balani, director research at Ismail Iqbal Securities, said equities turned positive in line with the global markets on hopes of success in coronavirus vaccine availability.

“Exploration and production companies remained in the limelight as international crude oil prices continued to recover over normalisation of business activities post COVID-19 economic lockdowns. Pharmaceutical sector also outperformed on exuberance related to vaccine sales expectations and production,” Balani added.

Salman Ahmed, head of institutional sales at Aba Ali Habib Securities, said, “Morgan Stanly, a highly reputed foreign brokerage house, in a report said the emerging markets have become attractive including Pakistan, which bodes well for domestic equities as it hints that sooner or later the foreign outflows will stop with the market receiving some fresh inflows".

Prime Minister’s finance adviser, Dr Hafeez Shaikh’s statement that no new tax would be imposed in the upcoming budget also carried weight, while the stock market also received support following a rise in crude oil prices, which boosted share price at domestic exploration and production sector. Shahab Farooq, director research at Next Capital, said, “The PSX remained positive throughout the session as index-heavy oil and gas sector contributed the most to the gains with a surge in international oil prices. Banks and cements remained under pressure today”.

The announcement of FBR’s plans to raise taxes worth Rs100 billion from banks’ bad debts caused pressure in banking stocks, while cements relatively traded at higher valuations. Major activity was focused towards 2nd and 3rd tier stocks, Farooq added.

The top gainers were Nestle Pakistan, up Rs116.25 close at Rs7,050/share, and Wyeth Pakistan Limited, up Rs71.20 to finish at Rs1,020.54/share. Unilever Foods, down Rs499 to close at Rs9,100/share, and Rafhan Maize, down Rs299 to close at Rs7,100/share, were the main losers.

Hascol Petrol recorded the highest volumes with a turnover of 31.662 million shares, whereas the scrip gained Rs0.66 end at Rs15.07/share. The lowest volumes were witnessed in P.I.A.C, recording a turnover of 6.080 million shares, whereas the scrip gained Rs0.51 to end at Rs4.83/share.