The KSE-100 had a strong day today, gaining 728pts (+1.8%) to close at 41,645pts with 222mn shares exchanging hands. Positive news on the external front (expectations of strong multilateral flows), continued buying in the heavyweight E&P sector, and buoyancy in Cements (on positive news related to development spending) led to the market extending its rally. As we had flagged in our morning note, local flows and sentiment remain exceptionally strong, and the 52wk high has now been taken out.
Major points contributors included PPL (+5.0%), HBL (+3.1%), OGDC (+3.4%) and POL (+3.2%), together contributing about 280pts. Drag emanated from MCB (-0.6%), BAFL (-0.7%) and EFERT (-0.5%).
Gains coincided with strong activity, with volumes expanding by 23%d/d to 222mn shares while traded value also rose by 17%d/d to USD 73.0mn. The major volume leaders were UNITY (31.4mn shares), SSGC (16.1mn shares) and FFL (15.6mn shares) while traded value was led by OGDC (USD 6.2mn), PSO (USD 5.4mn), PPL (USD 4.9mn) and MARI (USD 4.4mn).
The KSE-100 is now up c 45% from its CYTD low but this run up must be assessed in the backdrop of (i) a record seven-month losing streak from February to August, (ii) USD-adjusted CYTD returns have only just turned positive, and (iii) valuations are still attractive (c 7x on P/E vs. a cross-cycle average of 9x). As a result, while it is tempting to take some profits off the table, this may lead to missing out on the bull run. We think switching is a better strategy than simple selling. (Intermarket Securities Limited.)