KARACHI: The stock market snapped four-day losing streak on Thursday as the bulls appeared out of nowhere to toss the KSE-100 index up by 805 points, or 1.70 per cent, to close at 48,053 points. Traders and analysts fumbled for reasons to justify the massive rebound.
Market participants attributed the sudden surge of investors’ interest in equities to the decline in oil prices in the international market; Chinese Foreign Ministry’s spokesperson Zhao Lijian positive talk at the Gwadar Port and the government having raised Rs146bn through the PIBs auction where yield remained unchanged.
The developing situation in Afghanistan and the increase in Covid-19 cases for the first time in a week, were set aside. While those positives advanced by market gurus were convincing in varying degrees, the one major reason was the massive buying by mutual funds of stocks worth $12.7m. A fund manager said that “a leading state-owned pension fund” had invested huge idle sums in mutual funds.
Brokerage Arif Habib Ltd stated in their report: “Conversion of fixed income funds to equities from institutional investors played a vital role in today’s index uptick”. The executive director Next Capital Zulqarnain Khan said that the market was flush with liquidity. Since the market had taken a major dip in the previous four days, “big corporations with tons of cash entered the stock market through mutual funds,” he reckoned. Individuals who had been taking losses, seized the opportunity to take an exit at their buying price and sold shares valued at $9.29m.
Traders said that the recovery in international oil prices and recently announced price hike by cements, steels and fertiliser sector also reignited interest in key sectors.
Sectors contributing to the performance include technology (163 points), cement (144 points), banks (107 points), fertiliser (87 points) and power (51 points).
Stocks that were leading gainers included TRG (121 points), Lucky Cement (79 points), Hub Power Co (40 points), Systems Ltd (35 points) and Engro (31 points). The traded volume rose 15pc over the previous day to 475.2m shares while the traded value surged 43pc to $133.8m.
The trend of the market on the last trading day on Friday would show if the rally would gather steam or Thursday’s upsurge was merely a “dead cat bounce’’.
Published in Dawn, July 9th, 2021