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It appears that investors at Pakistan Stock Exchange have decided to give weight to falling number of Covid-19 cases and reports of Pakistan’s R-0 easing to less than 1, which implies low infection rate. That the benchmark index was up for tenth day in a row isn’t perhaps as much a big news as the fact that trading volumes seem to have returned at the bourse.

Jumping 61 percent over the day before, yesterday’s trading volume of KSE-100 companies stood at 333 million, which is the highest for the calendar year to date. Commercial banks led the way with 48 million shares, equalling about 14 percent of KSE-100 companies’ volume yesterday. Banks contributed about 218 points to the 447-point rise in the benchmark index, extending their gains since the start of this week, the likelihood of which was flagged earlier in this space. (See ‘KSE-100: new year, new opportunities, old problems’ Jul 6, 2020)

But guess which sectors were the second, third and fourth biggest volume contributors? It was ‘vanaspati & allied industries’, ‘cable & electrical goods’, and ‘technology and communication’, where one stock in each of those sectors led the way. Unity Foods (UNITY), Pak Electron (PAEL), and TRG Pakistan (TRG) posted volumes of 40 million, 39 and 38 million, respectively.

While the overall rise in market yesterday can be attributed to general improvement in sentiments on account of perceptions of softer Covid-19 outlook, and likely liquidity inflow to stock market in the wake of institutional limitation on National Saving Scheme, the huge rise in trading volumes of UNITY, PAEL, and TRG is rather inexplicable.

These stocks are hardly ever a part of the pitch deck universe of brokerage houses. If historical trends are any guide, the rise of little researched small stocks generally spell caution. Then again, the pulse from the trading floor is still upbeat with traders calling it a trending market in the make. Is the trend strong enough to immediately break on through to other side of 36,500-37,500 points, or whether it will take a breather, correct itself and then attempt to cross these levels again? The answer may reveal itself today.