Stocks rally as investors fall for bargains in oversold market

Stocks on Friday rallied as the oversold market was rife with ripe bargains, while activation of capital market support funds coupled with institutional activity, and some movement on International Monetary Fund loan agreement also did their trick, dealers said.

Salman Ahmad, director institutional sales at Aba Ali Habib said the market recorded gains as shares had reached oversold position, tempting investors to book available stocks. Ahmed added that another factor which helped investors build positions was the ongoing talks of Finance Minister Asad Umar with the officials of World Bank and International Monetary Fund proved fruitful.

“IMF and the government would soon sign an agreement would be signed with surely some string attached but the program to rescue and bail out the country from economic mess”, Salman said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index jumped 1.50 percent, gaining 550.23 points to close at 37,337.87 points level, whereas KSE-30 hit a high of 1.56 percent or 271.53 points to end at 17,650.55 points level.

Of 352 active scrips, 282 moved up, 54 retreated, and 16 remained unchanged. The ready market volumes stood at 189.356 million shares, as compared with the turnover of 143.798 million in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporations said bullish activity was witnessed in the pre budget rally with late session buying on investor speculations on reports over staff level agreement of International Monetary Fund (IMF) bailout package, inviting fiscal adjustments and easing economic uncertainty.

Upbeat data on trade deficit for July-March FY2019, rupee stability, and hopes for positive outcome of announcements over proposed tax amnesty catalysed a bullish close,” Mehanti added.

Madiha Javed head of research at Ismail Iqbal Securities said the market remained positive throughout the session today on hopes that state-owned institutions may kick in to support the market which would help in liquidity and price discovery. In terms of index points, commercial banks, cements and OMCs were the major contributors to the index’s gains today, Madiha added. An analyst said the market saw fresh activity from the mutual funds and some of the state-run companies raising queries and buying stocks, which supported the slumping bourse.

There was general consensus that state own financial institutions were seen active and started supporting the capital market amid whispers that some capital market fund was on cards to support the market, the analyst added.

Rumours were doing rounds that the government had agreed upon on creation of capital market support fund, asking state-run financial institutions to pump liquidity to safe market frown downgrading from MSCI.

In May 2017, the MSCI had upgreaded Pakistan’s stock market to emerging market from frontier market status. The next review is likely on May 13.

The highest gainers were Rafhan Maize, up Rs317.00 to close at Rs6672.00/share, and Unilever Foods, up Rs299.00 to finish at Rs6799.00/share.

Companies that booked highest losses were Phillip Morris Pakistan, down Rs200 to close at Rs3800/share, and Island Textile down Rs94.74 to close at Rs1800.25/share. BoP recorded the highest volumes with a turnover of 22.801 billion shares, while the bank’s scrip gained Rs0.9 to close at Rs13.61/share.

The lowest volumes were witnessed in WorldCall Telecom recording a turnover of 10.554 billion shares, whereas the scrip shed Rs0.04 to end at Rs1.10/share.