Egypt's benchmark EGX 30 index snapped a four-day losing streak and closed 5.3 percent higher on Sunday, the third day of trade since political turmoil closed the bourse for more than seven weeks.
The index posted its biggest single-day gain since 13 December, 2009 and its first gain since mass protests erupted on 25 January to oust President Hosni Mubarak, with jittery investors grabbing stocks they believed had become cheap, traders said.
"The panic has slowed down gradually… and prices have fallen to attractive levels that prompted buying," said Hashem Ghoneim, vice chairman of Pyramids Capital.
Major stocks, including heavyweights Orascom Telecom, Orascom Construction and Commercial International Bank, jumped 10 percent by the market close.
Egypt's biggest listed firm Orascom Construction and Commercial International Bank posted their biggest one-day jump in years.
"People were expecting the worst and saw a bleak picture, but optimism returned to the market when the worst did not happen," Ghoneim added.
Trading volume was firm, traders said, and turnover reached 1.1 billion Egyptian pounds (US$184.9 million). The EGX 30 index closed at 5,212 points.
Some traders expect the market rally to continue on Monday until the main index reaches a resistance level of 5,300 points, that if sustained, could take the index as high as 5,650 points.
"Some blue chips will (resist) a market slowdown because their fundamentals and growing business operations will be supportive," said Mohamed Kotb, director of asset management at Naeem Brokerage.
Defensive telecoms stocks and dollar-denominated Maridive and Oil Services helped the main index rebound from last week's 12.3 percent fall.
Traders cited buying appetite in the telecom sector with optimism that a Vimpelcom and Orascom deal could be completed successfully.
"Investors are very bullish on Orascom Telecom, which has fallen to cheap levels, helping pull the telecoms sector up," Ghoneim said.
Mobinil and landline monopoly Telecom Egypt surged 10 percent.
Maridive, which also gained 10 percent, is seen as one of the top picks on the index with the bulk of its operations outside Egypt and a booming oil services industry.
"Stocks that will not be largely affected by the political turmoil are those that rely on operations abroad," said Kotb.
He added that Orascom Construction was among the top stock picks because of its regional and international businesses and because of rising fertilizer prices. Nearly 80 percent of its revenue is generated outside of Egypt.
Shares in EFG-Hermes, Egypt's biggest investment bank, rose 2.8 percent. El Sewedy Electric leapt 9.2 percent.
The broad EGX 100 index rose 7.2 percent. Trading was suspended for a half hour, minutes after the EGX 100 rose 5.1 percent on Sunday, exceeding a 5 percent daily limit under circuit breaker rules.
But most construction and property firms bucked the trend as negative sentiment continued to dominate on stocks mired in legal disputes or connected to Mubarak's ruling party including Ezz Steel and Palm Hills.
Ezz Steel Chairman Ahmed Ezz, who was a top official in Mubarak's party, has been detained since 17 February pending trial on suspicion of squandering public funds.
Palm Hills faces a legal challenge contesting its purchase of a plot of land from the state. A judicial panel concluded earlier this month the sale was illegal because it was priced too cheaply and said it should be scrapped.
Shares in Ezz Steel and Palm Hills tumbled 10 percent each. Talaat Moustafa Group, Egypt's biggest listed developer, ended 2.8 percent lower after slumping 10 percent by mid-session. SODIC slid 0.5 percent.
Kotb said investors dumped stocks in private property firms and shifted to those with public sector stake including Medinet Nasr Housing and Helioplis Housing, which both rose 10 percent.
