Market watch: Investors bank profits over lower interest rate cut

Benchmark KSE-100 index falls 102 points.

KARACHI: The stock market opened the week on a negative note after a lower-than-expected cut in the benchmark interest rate by the State Bank of Pakistan, which announced the monetary policy for the next two months last Friday.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index shed 0.65% or 102.38 points to end at 15,652.01 points.

“Drop in international equity markets and decline in commodity prices also forced investors to trim their portfolios, especially in oil exploration companies and textile sector,” said Samar Iqbal, equity dealer at Topline Securities.

Increased leveraged amount also augmented the selling pressure, Iqbal added.

Trade volumes fell to 119 million shares compared with Friday’s tally of 146 million shares. Shares of 366 companies were traded on the first trading session of the week. At the end of the day, 110 stocks closed higher, 195 declined and 61 remained unchanged. The value of shares traded during the day was Rs4 billion.

The bourse saw selling in late session in cement, textile and fertiliser sectors amid concerns over gas shortfall in the industrial sector.

On the contrary, buying interest was seen in the banking sector amid hopes that banking margins will not squeeze after the cuts in the discount rate.

Moreover, cut in cash reserve ratio to daily minimum of 3% was taken positively and invited investor support in banking stocks, according to Ahsan Mehanti, analyst at Arif Habib Corporation.

Uncertain outcome of the ongoing National Reconciliation Ordinance (NRO) implementation case in the Supreme Court and concerns about security situation in the country played a role in creating bearish sentiments, Mehanti added.

Pakistan Telecommunication Company was the volume leader with 17.5 million shares gaining Rs0.16 to finish at Rs19.87. It was followed by Nishat Mills with 10 million shares falling Rs2.94 to close at Rs58.46 and DG Khan Cement with 8.2 million shares losing Rs1.52 to close at Rs48.69.

Foreign institutional investors were net buyers of Rs6.9 million worth of shares, according to data compiled by the National Clearing Company of Pakistan Limited.

The market should readjust itself to the new fundamentals and after consolidation should continue with its upward trend, according to JS Global Capital analyst Shakir Padela.

Published in The Express Tribune, October 9^th, 2012.