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Stocks rise as bargain hunters swoop up bank, energy shares

Business

June 3, 2020

Stocks gained on Tuesday, as investors sought bargains in beaten-down banking and energy shares after the index fell in previous sessions on fears over the fast-spreading coronavirus, dealers said.

“Major financial stocks led the rally as investors cherry picked the sector on attractive valuations resultantly most banks hit their respective upper circuit level,” Topline Securities said in a post market note. “E&P sector further supported market, on higher international oil prices.”

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 1.13 percent or 386.08 points to close at 34,408.05 points level. KSE-30 shares index followed suit with a high of 1.45 percent or 215.83 points to end at 15,071.48 points level.

Of 358 active scrips, 172 up, 161 retreated, and 25 remained unchanged. The ready market volumes stood at 221.691 million shares, as compared with the turnover of 198.095 million shares in the previous session.

Dealers said banks managed to attract investors’ attention with significant easing in lock-down that would eventually lead to recovery in economic activity in the country.

“Expectations of no more major cut in interest rates also fueled positive sentiments in the banking stocks that were trading at attractive multiples,” analyst Shahab Faroq of at Next Capital said.

Hopes of further rate cut fade out on stable inflation number for the month of May, which met market expectations.

Dealers view several companies became attractive and their valuations calls for fresh buying following dismal performance last month owing to Ramadan and COVID-19.

Analyst Ahsan Mehanti from Arif Habib Corporations said stocks closed bullish led by selected scrips across the board as investor weigh national savings’ rates cut and upbeat consumer inflation data.

“Finance minister’s affirmations over no new taxes in the upcoming budget, high crude prices and government commitments over easing lockdown helped pre-budget rally at the PSX,” Mehanti added.

Dealers said the market is lacking momentum before the budget and banking sector is only moved on revision in NSS rates.

Analyst Salman Ahmad at Aba Ali Habib said the market showed stability and hope that the E&P sector to perform well days ahead as oil producing countries are meeting on June 4 to further extend production cut.

“Moreover, the cement sales number recorded decline because of Ramazan and COID19 and after ease down across the globe and in the country, construction activity would improve sharply in coming months,” Ahmad said. “Another factor which boosted sentiment where dividend yield came into play following the rate cut in NSS.”

The top gainers were Unilever Foods, up Rs188.00 close at Rs9,899.00/share, and Indus Dyeing Rs43.22 to finish at Rs638.00/share.

Sapphire Fibre down Rs55.53 to close at Rs709.50/share, and Ferozsons Laboratories Rs22.76 to close at Rs307.32/share, were the main losers.

Pakistan Elektron recorded the highest volumes with a turnover of 14.217 million shares. Whereas the scrip loss Rs0.21 end at Rs24.15/share.

The lowest volumes were witnessed in Bank Al-Falah recording a turnover of 5.811 million shares, whereas the bank's scrip gained Rs2.18 to end at Rs31.25/share.