Stocks swell as subduing virus spurs revival hopes

Stocks on Monday paced ahead as cement, steel, and oil sectors, drove them to another strong ending, amid hopes that with CVOID-19 losing strength, economic activities would soon be unlocked completely, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 0.86 percent or 319.72 points to close at 37,650.57 points, while its KSE-30 index hit a high of 0.88 percent or 141.39 points to end at 16,289.22 points.

Analyst Ahsan Mehanti from Arif Habib Corporation, said, “Bullish activity continued amid record trades led by scrips across the board in the earnings season rally as investors weighed an 88 percent surge in foreign direct investment and a 27 percent contraction in trade deficit”. Decision to raise K-Electric industrial tariff in phases, drug regulator’s approval for up to 10 percent surge in local medicine prices, surging foreign exchange reserves, strong earnings outlook in cement, oil, and banking scrips on higher global crude oil prices, and government’s lending initiatives for construction sector fueled the rally, Mehanti added.

Of 414 active scrips, 269 advanced, 122 retreated, and 22 remained unchanged, while volumes stood at 553.817 million shares, compared to 466.058 million shares in the previous session. Tahir Abbas, director research at Arif Habib Ltd, said, “A continuous decline in novel coronavirus infection ratio and cases reported on daily basis let the investors heave a sigh of relief”.

Abbas said, a flattening COVID curve would help build consensus economic activities would be in full swing before long and losses incurred since March would be offset soon. “Moreover, foreign exchange reserves buildup also sent some positive vibes across the market, but the cause of concern for investors was a weakening rupee,” he said.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “The cement, steel and oil shares helped market to land in positive zone”. Cement and steel shares were appreciating on the back of government’s plan to resume construction of water reservoir projects and ‘Naya Pakistan’ scheme, which would boost the construction activity in the country, raising the demand for building material, Ahamd said.

“Oil shares also rose sharply as the global crude oil prices are stable, whereas COVID-19 cases are falling across the globe, unlocking economic activity, and increasing the demand for petroleum products,” Ahmad added. Shahab Farooq, director research at Next Capital, said, “The market maintained its upward trend sustaining above 37,000 level with healthy volumes”.

The rally was led by banks and oil gas sectors amidst value-buying in anticipation of good results for the quarter ended June 2020, Farooq added.

Fahad Rauf, deputy research head, at Ismail Iqbal Securities, said, “Equities remained positive throughout the session today. [Sentiments also improved owing to the fact that] active coronavirus cases in the country have dropped to 53,500 and the curve is flattening”. Mari Petroleum Company Limited announced the discovery of 17.88 mmcfd of gas from Hilal-01 in Mari block, while power, cement and engineering sector led the index gains, cumulatively adding 158 points, Rauf added.

Rafhan Maize, by gaining Rs200 to close at Rs7700.00/share, and Island Textile, going up Rs43.07 to finish at Rs1249.99/share, emerged as the top gainers, while Nestle Pakistan, down Rs150 to close at Rs6,750/share, and Phillip Morris Pakistan, losing Rs79.85 to close at Rs1800.10/share, were the main losers. Hascol Petrol posted the highest volumes with 32.523 million shares, but lost Rs0.08 to end at Rs14/share, while Hum Network registered the lowest with 15.089 million shares, but gained Rs0.99 to end at Rs10.21/share.