KARACHI, May 13: The Karachi stock market warmly greeted the election results with KSE-100 index up by a staggering 328.55 points or 1.65 per cent on Monday, the first post-election trading session.
The index easily dismantled the 20,000 barrier and closed way above that, at 20,244.82 points. The market saw across the board surge in stock prices, but several blue chips were major gainers. The Mansha group stocks, MCB Bank and Nishat Mills hit the ‘upper lock’.
MCB Bank has rallied with three ‘upper locks’ in a row, with the stock up by about Rs34 or 15 per cent in three days. Index heavyweights in energy, cement and banks led the rally.
Mohammad Sohail, CEO at Topline Securities observed that contrary to market expectations of a hung parliament and weak coalition government, the emergence of a single party with comfortable majority to be able to form the government was thought to bring good tidings for the country, which could bring stability and help dispel economic woes.
Both local and foreign investors were aggressive buyers who saw value in the country equity market where stocks were currently trading at a multiple of seven times, which was lower than the regional markets by 30-40 per cent, Sohail said.
Analyst Veer Bajaj at JS Global also said that for the KSE, the key positive was that election results were far more decisive than the pre-poll outlook, with PML-N emerging dominant and two-time former Prime Minister Nawaz Sharif all set to take the seat for the third time.
He observed that the market broke the 20,000 psychological barrier as investors seemed positive overall even when prices of stocks were at such high level.
Many scrips touched ‘upper lock’ including PSO, NML, MCB Bank, Pioneer Cement and PIA. Cement sector was the volume leader after the release of monthly cement figures.
Analyst Abdul Azeem at Invest Capital pointed out that as per the PML-N manifesto, promises were made on low interest rate scenario to provide level-playing field to local industry and low tax rates. Both factors bode well for the local capital market.
Moreover, expectation of improved energy position mainly in Punjab will keep textile, cement and other industries’ profitability on the higher side.
Samar Iqbal, Senior Manager Equity said that investors feel that stable government would force economic leaders to take bold steps to put economy back on track. PSO closed at upper limit as investors expect some resolution on the circular debt front.
“Stability is good for the market,” said Syed Faisal Shaji at Standard Capital.
The foreign investors continued to be bullish on Pakistan equity. On Monday, foreign inflow amounted to $7.29 million, which led the local buyers. “In the last four sessions, foreign investors have bought equity worth $30m,” a analyst calculated. Among local participants, ‘companies’ went into aggressive buying on Monday with fresh investment of $4.94 million.
‘Individuals’ also took heart and picked up choice scrips of the value of $0.40, after several days of profit-taking. “Banks” offloaded shares worth $7.29 million on Monday and mutual funds were also in the ‘sell’ mode, disposing of stocks worth $1.95m to take profit.
Turnover jumped to 280 million shares on Monday, from 218 million shares traded last Friday. Trading value shot up by Rs2.679 billion to Rs9.806 billion, from Rs7.126 billion. Fauji Cement was in the lead on the active list with a huge volume at 32m shares, up by 40 paisa to Rs10.58.