The stock market fell on the first trading session of the week led by the banking sector that received a hammering following central bank’s increase in the returns they have to pay their account holders over the weekend.
The Karachi Stock Exchange’s (KSE) benchmark 100-share index fell 0.21 per cent or 28.73 points to end at the 13,770.70 point level.
State Bank of Pakistan increased the mandatory minimum interest rate that banks must pay their depositors on savings accounts from 5% to 6% on Saturday. Banks will lose about Rs17 billion from their net interest income as a result of the 1% increase, according to Topline Securities.
MCB Bank, having the biggest deposit base in the country, was the worst hit and closed down by 3.5%.
The benchmark stock market index fell by around 200 points in early trade but recovered after media reports suggested that capital gain tax ordinance may not be delayed further, said Topline Securities Equity Dealer Samar Iqbal.
Trade volumes fell to 261 million shares compared with Friday’s tally of 380.02 million shares.
On the other hand, the cement sector kept on performing with DG Khan Cement and Lucky Cement closing at their daily upper limit due to increase in cements prices over the weekend and with it anticipation of better profits.
Foreign institutional investors against the odds were net buyers of Rs293 million worth of shares, according to data maintained by the National Clearing Company of Pakistan Limited.
Shares of 361 companies were traded on Monday. At the end of the day 141 stocks closed higher, 143 declined while 77 remained unchanged. The value of shares traded during the day was Rs6.23 billion.
Jahangir Siddiqui and Company was the volume leader with 28.79 million shares declining 0.98 to finish at Rs17.79. It was followed by Fauji Cement with 25.50 million shares firming Rs0.61 to close at Rs6.76 and Dewan Cement with 19.51 million shares falling Rs0.19 to close at Rs6.27.
Published in The Express Tribune, April 17th, 2012.
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Yes, seems like there is more going on here to me as well Amber! I've noticed the commercials are net short stocks right now, so a bigger sell off is in the works in my opinion.
Rs 17 billion loss for 22 commercial banks doesn't seem so big that stocks prices went down for most banks. I am sure the banks would counter this SBP move by increasing the minimum balance requirement on savings accounts. They already offer higher rate on accounts with higher balance.