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Stocks post solid gains of 1.1pc wow despite profit-taking
Summary

The investors in stock market remained positive in February with number of developments on economic and political front. The start of the vaccination drive, continuous flow of healthy upcoming corporate results, signing of the government with the IPPs to clear overdue payments and failure of PDM to dislodge the Prime Minister on 31st January to resign, stocks hit intraday high of 47,339 and the keep on touching with 47,000 level during the week.

It was a short week of four days as PSX remained closed on Feb 5, being Kashmir Solidarity Day. KSE-100 Index gained 520 points to close at 46,905.79. The average volume declined to 555 million from 674 million previous week. The market capitalization increased by Rs.82 billion to close at Rs.480 trillion.

The market on Monday started on positive note soaring to intraday high of 377.10. However, heavy selling of $7.38m by foreigners saw the Index down by 137.09 points to close at 46,248.45. The volume of 694m shares was the highest of the week.

There was a rally of 331.89 points on Tuesday. The government has signed agreement with IPPs to clear overdue payment, which will open the door of circular debt of the oil & gas marketing companies. The Index closed at 46,580.34.

The bullishness on Wednesday continued due to rise in global stock and rising trends in oil prices and due to coronavirus vaccination drive was launched in the country. The Index gained 353.29 to close at 46,933.63.

The stocks was flat on last day of trading of the week on Thursday. The Index again test three-year high of 47,000 but closed down with losing of 27.84 points to 46,905.79.

Participants/Activity

On average shares of 432 companies were traded. Of these 200were gainers and 213 were losers and 19 remained unchanged. Foreigners were seller $2.74m, Banks were seller $0.65m; Mutual fund net buyer $1.97m, Company buyer $5.8m, Insurance seller $3.50m and Individual buyers $12.43 and seller $12.43m.

Volume leaders were: K-Electric Ltd 177m; Pak Refinery 174m; Hascol Petrol 131m; Pak Int.Bulk 101m; TRG Pak Ltd 60m; Telecad and Al-Shaheer and 1st Capital Security 20m each.

Triggers

– Foreign exchange reserves of the SBP increased by $33 million to $13.20 billion during the week ended on Jan 29,2021. The total reserves were $20.163 billion.

– Ghandhara Nissan presented its Brownfield investment business plan to the tune of Rs.2.4 billion for launching passengers cars in Pakistan in collaboration with China’s Cherry Group.

– Pakistan’s fiscal deficit widen to Rs.1.13 trillion in 6MFY21.

– Cotton production falls by 5.571 million bales up to Jan 31, 2021 compared to 8.487m last year, which is 34.35 percent; lowest in 30 years.

– Agha Steel inks deal for solar power for installing a 2.25-megawatt solar power project at its production facility at Port Qasim.

– Treasury bills attract fresh foreign investment of $6.921 million under treasury bills on Feb 2, 2021.

– The month of January saw a deeper deceleration in prices of consumer products as inflation eased to 5.7 percent from 8 percent in Dec 2020.

– Pakistan’s exports grew for the fifth consecutive month in January to $2.14 billion up to eight percent from $1.98 billion in the corresponding month last year.

– Pakistan total oil sales rose by 11 percent to 11.258 million tonnes during the first seven months of FY21 owing to massive jump in demand for furnace oil ‘high-speed diesel and petrol’.

– Lucky Cement plans to enhance its capacity to 3.15m tonnes per annum at its Pezu Plant to keep pace with rising demand on the back of revival of economic activity.

– Cattle shipment of 2,078 head of cattle from the US has arrived as a part of a strong partnership between US Department of Agriculture and Pakistan dairy sector.

– PSM privatization process to end by September, SC told by Secretary Industries and Production.

– AGP Pakistan Ltd – a listed pharmaceutical company – announced that the Drug Regulatory Authority has granted emergency use authorization for ‘Gam-COVID-Vac combined vector vaccine to prevent coronavirus infection caused by SARS-CoV-2 virus (Sputnk V) to the company’

– Cement makers raise prices as sales jump 17 percent in 7MFY21.

– Roshan Digital Accounts attract $400m in four months since Sept 20, 2020.

– ECC gave approval for removal of the cap on MARI distribution on its dividend payment.

Conclusion

The government strategy to boost the construction will affect many other allied sectors for the growth. Banks have been allocated Rs.378 billion – five percent of their total loan portfolio-for the low-cost housing scheme. Prime Minister Imran Khan does not believe in ‘Trickle Down effect’ but in fact applying ‘bottom to upside approach’ model of growth.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research& Training (Pvt) Ltd, Karachi
Dated: Feb 5, 2021

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