Market watch: KSE-100 rises despite rupee depreciation

KARACHI: The stock market, following a bearish start to the week on Thursday, rebounded on Friday on the back of a rally in shares of oil companies, driven by a slight improvement in global crude prices.

The benchmark KSE-100 index shot up as soon as trading began and crossed the 34,000-point mark, but selling pressure, stemming from concern over a surging fiscal deficit, wiped off most of the gains.

An expected Rs216-billion subsidy for the power sector in the federal budget for FY21 pushed stocks up. However, rupee instability against the dollar coupled with pre-budget uncertainty dented investor sentiment.

Profit-booking was witnessed towards the end of trading, nevertheless, the KSE-100 index managed to close with gains.

At close, the benchmark KSE-100 index recorded an increase of 235.81 points, or 0.70%, to settle at 33,931.23.

JS Global analyst Maaz Mulla said bears were defeated as the market remained in the green zone and closed at 33,931, up 236 points.

“The benchmark index opened positive and rose to a high of +353 points as institutional participation was witnessed in main board stocks,” he added.

“On the news front, the government raised Rs168.8 billion through the auction of Pakistan Investment Bonds (PIBs), exceeding its target of Rs125 billion.”

Moreover, the federal government was likely to earmark Rs216 billion in subsidy for the power sector, including K-Electric, in the budget for 2020-21, to be announced in the second week of June.

Top volume leaders were TRG Pakistan, Unity Foods and Hascol Petroleum, cumulatively contributing 62 million shares to the total volumes.

During the trading session, Oil and Gas Development Company (OGDC, +3.3%), Hubco (+1.9%), Lucky Cement (+2.4%), Pakistan Petroleum Limited (PPL, +1.7%) and Abbott Laboratories (+7.5%) were major movers of the index.

“Moving forward, we expect the market to continue to exhibit similar behaviour and recommend investors to book profit in the short term,” the analyst said.

Arif Habib Limited, in its report, stated that the market traded in the positive zone, which was primarily caused by a slight improvement in international crude prices as compared to Thursday.

Exploration and production and oil marketing companies largely remained positive. Cement and banking sector stocks also rebounded from recent lows.

“Cement sector stocks saw an attrition of 10% in the past couple of sessions, from recent peaks, and gave an opportunity to investors for a comeback, especially on Friday – the last trading day of the rollover week,” the report added.

The pharmaceutical sector, on the contrary, slid down with Ferozsons Laboratories hitting its lower circuit.

However, the technology sector continued to move upwards and posted high volumes with trading in 34.3 million shares, followed by cement companies (26.7 million) and vanaspati firms (25.8 million).

Stocks that contributed positively to the index included OGDC (+53 points), Hubco (+32 points), Lucky Cement (+31 points), PPL (+24 points) and Abbott (+16 points).

Stocks that contributed negatively were Engro (-34 points), Nestle (-26 points), MCB (-16 points), Pakistan Tobacco (-11 points) and PSO (-8 points).

Overall, trading volumes increased to 233 million shares compared with Thursday’s tally of 194.7 million. The value of shares traded during the day was Rs10.2 billion.

Shares of 341 companies were traded. At the end of the day, 191 stocks closed higher, 131 declined and 19 remained unchanged.

Unity Foods was the volume leader with 25.8 million shares, gaining Rs0.17 to close at Rs13.45. It was followed by Hascol Petroleum with 19.5 million shares, gaining Rs0.03 to close at Rs14.74 and TRG Pakistan with 16.5 million shares, gaining Rs0.87 to close at Rs28.55.

Foreign institutional investors were net buyers of Rs76.1 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.