Short covering was the order of the day in Karachi Stock Exchange on Wednesday as nearly all scrips belonging to oil, gas, banking and cement sectors registered growth which had received heavy battering in the last two sessions, and because there were some positive developments also.
The KSE-100 Index closed at 11094 level, up 387.72 points from previous closing of 11707. The volume in the ready market was 235 million shares, almost 15 million more than previous trading. The volume in futures market was 103 million shares, against 118 million shares recorded on Tuesday.
Rabia Hussain, research analyst at Jahangir Siddiqui Capital Markets, said that after a huge correction of almost 800 points in just two days, the market recovered on Wednesday on the back of buying by institutional investors. The news regarding OGDCL discoveries and attractive valuations triggered bullish momentum in the market and throughout the day buying was seen across the board, with Pakistan Oilfields, Lucky Cement, DGKC Cement, Bank of Punjab and Muslim Commercial Bank closing at their upper circuits.
Jawaad Haleem, research analyst at Atlas Capital Markets, said that the ''rejuvenation'' emanated from the positive news regarding another discovery by OGDC, which could add Rs 0.5-0.7 per share to its earnings. The news of Union Bank''s acquisition by Standard Chartered Bank added some zeal in the scrip though some brief news regarding this was already made public on Tuesday.
The likely ban on cement export by India generated buying activity in the entire cement sector.
OGDCL contributed the most to the market climbing with 106.80 points, followed by NBP and PPL, which added 34.10 and 27.44 points to the index, respectively
Hasnain Asghar from Aziz Fidahusein said that the session witnessed buying in oil and gas exploration and marketing, fertiliser, banking, cement and insurance stocks in the early hours, however, failed to create interest among short sellers and repeated attempts were made to exert pressure. Ability of the index to maintain positive stance created unrest among the bearish lobby and across the board covering allowed the index to recover the entire losses incurred during previous sessions.
Technically, the index has completed the recovery cycle, while fundamentally values are still present in the main stocks as certain sectors are likely to stay attractive for upcoming years. It is, however, recommended to wait for the index to sustain around current levels with healthy volumes for taking fresh positions. Unaddressed previous outstanding issues and newly raised questions and the suspense regarding upcoming budget will not allow a smooth run. Technically, the index would continue to face resistance around 11210-11222 while immediate support stays at 10910-10917.