An auspicious start to the Holy Month of Ramadan with KSE100 closing 2.21% higher to 8,287points led by E&P stocks. Technical indicators were positive with all pivotal indicators denoting an upside following Friday's positive closing above the 8100 level. Rating upgrade by S&P's and market talk of re-introduction of the traditional badla or CFS lifted sentiment. PPL closed limit up on the back of surprise bonus payout with earnings coming in line with estimates. Further, OGDC and POL followed suit gaining 3.9% and 5% respectively on reports of foreign funds buying and with crude oil sustaining above the US70/bbl level. Telecom giant, PTC reached upper circuit during mid-day trading on market rumors that Saudi Telecom is interested in acquiring strategic stake in the company. Volumes were healthy considering the shorter timings and lower interest during Ramadan. Confidence of local funds has improved lately on continued foreign interest and with the market sustaining above the 8000point level.
The recovery in AICL continued with the second upper lock in succession as result-related apprehensions in the stock seem to be priced-in. Cements (particularly DGKC) seem ripe for accumulation as we feel that recent negatives seem to be reflected in current values given the batterings that the stocks have seen in the past couple of sessions. Today's comprehensive upturn places the market within striking distance of the 8500 point level. However, the market seems to be attaching undue high expectations to the awaiting corporate earnings. While the 9000 level for the KSE-100 does not seem inconceivable in the short-term, we urge exit at the height of any further potential rally (ideally between 8500-8700 levels).
BUYS: AHSL, ENGRO, DGKC, UBL, NML
SELLS: PTC, PPL
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