KARACHI: The stock market staged a spectacular rally on Wednesday as the bulls tossed the KSE-100 index up by 1,195.04 points (3.57 per cent) representing the highest single day gains in percentage terms over the past seven months. The index stormed past the 33,000 level to close at 34,637.14.
It was the third consecutive day of gains in the ongoing week, which appears poised to snap the seven successive weeks of sell-off which had seen the index sink 14pc. Last week, the index plunged 1,550 points (4.5pc) and closed at three-year low of 33,167 points.
An asset manager of a mid-sized firm, who asked not to be named, said that two funds in particular —one government-owned and the other an Islamic Fund were ceaselessly dumping stocks in the market.
But that was not enough to mop up all of the liquidity, when local participants’ confidence was at rock bottom.
Topline Securities Chief Executive Officer Mohammad Sohail said that the market recovery was witnessed on Wednesday as investors’ hopes were raised regarding the Market Support Fund and after the heavy selling by mutual funds came to an end.
“The market is expecting a stabilisation fund of between Rs15 to Rs20bn in a week or two to commence buying”, said a major market player. The investors were buying in anticipation, which was why most blue chips hit upper circuits on Wednesday.
Volumes traded surged 33pc over the previous day to 204m shares, reflecting 23-session high activity as value investors also jumped in to cherry pick stocks trading at attractive valuations.
Oil and gas exploration, fertiliser, and banking sector cumulatively contributed 705 points to the index gains. Cement also rallied with most stocks closing at their upper limit including Lucky Cement, D.G. Khan Cement, Maple Leaf Cement Factory and Kohat Cement.
Exploration and production sector also saw all three major stocks hit their upper circuits after Pakistan Oilfields Ltd, Pakistan Petroleum Ltd and Oil and Gas Development Company each gained 5pc.
Published in Dawn, May 23rd, 2019