The extension in implementation of Client Level Netting (CLN) in futures deliverable contracts for another 30 days, coupled with investors'' confidence over the prevailing political situation in the country invited fresh buying, especially in banking, cement and oil & gas exploration sectors on Tuesday.
KSE-100 index gained 190.06 points to close at 11,331.35 points level while KSE-30 index surged by 294.04 points to close at 14,139.42 points level. The market opened on strong positive note and hit the 11,372.52 points intra-day high. Trading activity was improved and the ready market volume increased to 143.499 million shares against 136.406 million shares and the futures market turnover increased to 67.675 million shares as compared to 59.755 million shares traded of Monday.
The overall market capitalisation also increased by Rs 43 billion to Rs 3.080 trillion. CFS value increased by 1.09 percent to Rs 44.32 billion as compared with Monday''s value of Rs 43.84 billion, with five highest CFS scrips being NBP, OGDC, PPL, POL and BoP. Trading took place in 354 scrips, out of which 194 scrips closed in positive column and 121 scrips closed in negative column while the value of 39 scrips remained unchanged.
Lucky Cement was the star performer of the day with 12.173 million shares with Rs 2.80 gain to close at Rs 77.50, followed by Bank Al Falah which gained Rs 2.15 to close at Rs 46.00 with a volume of 11.476 million shares.
NBP surged by Rs 7.92 to close at Rs 237.05. However, JS Bank closed at Rs 14.60, down by Rs 0.40, and D G Khan Cement surged by Rs 3.20 to close at Rs 87.35. In E&P sector, OGDC and PPL gained Rs 1.40 and Rs 4.80 to close at Rs 116.90 and Rs 247.80 respectively while in the other top ten volume leaders Fauji Cement Bin Qasim and Kot Addu Power surged by Rs 0.25 and Rs 1.55 to close at Rs 31.10 and Rs 57.95 respectively. However, WorldCall Telecom closed at 11.45, down by Rs 0.05.
Wyeth Pak and Nestle Pakistan were the highest gainers with Rs 89.75 and Rs 72.00 gains to close at Rs 1900.00 and Rs 1512.00 respectively while Central Ins and Pak. Services were the highest losers and closed at Rs 124.80 and Rs 360.00, down by Rs 6.55 and Rs 5.00 respectively.
Ahsan Mehanti, CEO of Shehzad Chamdia Securities, said that the main reasons for positive close were oil prices increase to $61 on gasoline demand, extension of CLN in the future deliverable contracts to next month, expectations of settlement of margins issue with respect to cum bonus CFS scrips and investors confidence over the prevailing political situation of the country.
Hasnain Asghar Ali at Aziz Fidahusein Securities said that finally the trump card was used to pull the market out of deep waters, as the Board of Directors of Karachi Stock Exchange forwarded a request to the Securities and Exchange Commission of Pakistan allowing extension of implementation of Client Level Netting on futures market which was scheduled to be implemented from April futures.
After the extension it will now be implemented from May futures. The extension, therefore, allowed the market some breathing space and the stocks available at extreme discounts witnessed consolidation that created unrest among the short sellers. Short covering, therefore, allowed the index to make an intra-day high of 11,372.52 points (233 points up).
Although low volume surge initially failed to invite renewed buying interest, temptation of attractive levels in the stocks was likely to continue the growth pattern witnessed fresh inflow. Leading the rally were banking and oil & gas exploration stocks (increased in oil prices in the international market invited an early short covering in the sector stocks). Fertiliser sector followed the move.
The question, however, arose that what happened to the other reasons and developments held responsible for low turnover and adjustment as the political uncertainty still prevailed and the US statement related to Pakistan had still not been negated. Face of the matter was that investors and market participants wanted a healthy working environment while the offshore investors looked at consistency in policies and sound economic growth.
Preference is, however, given to liquid investment in volatile regions. Therefore, sensitive changes should only be made after thorough exercises and if deemed necessary rollback option should be used. Technically, ability to field low turnover, however, restricted the move. Next major resistance stays at 11,427-11,432 while support will come around 11,190-11,197.