Market watch: As rupee falls, KSE-100 climbs 770 points

Benchmark index increases 1.77% to close at 44,309.74

KARACHI: Spurred by a 4% fall in the rupee’s value against the dollar, the KSE-100 Index jumped 770.14 points or 1.77% as investors rushed to buy stocks that benefit from a weaker currency.

Quite fittingly, the textile and oil sectors gained due to a direct advantage, while shares of banks got a boost due to expectations of an early interest rate hike that would come on the back of higher inflation readings.

Market talk suggested the dollar went as high as Rs116 in intra-day trading before settling at Rs115 at close. The rupee depreciation comes on the back of immense pressure on Pakistan’s foreign exchange reserves that have plunged to around $12 billion as a widening current account deficit takes its toll on the economy.



At close on Tuesday, the benchmark KSE 100-share Index finished with an increase of 770.14 points or 1.77% to settle at 44,309.74.

Elixir Securities’ analyst Muhammad Arbash said equities closed higher with the benchmark KSE-100 Index recording massive gains and settling above the 44,300 level.

“Market opened on a positive note and started to rally during the first hour of trading on reported 4% depreciation of PKR against the greenback in the interbank market, with PKR/USD parity reportedly crossing PKR 116/USD intra-day,” he said.

“Among the key sectors, E&Ps, textiles and power that either have dollar-linked revenues or export sales gained on the weaker currency, while financials also closed higher on expectations of rise in inflation, and interest rates, going forward,” he added.

Cements, which stand to lose from the rupee decline due to higher imported prices of coal, also closed in the green zone, seeing good turnover amid news of third round of increase in retail prices in the north.



“On the flip side, auto assemblers and oil refineries succumbed to profit-taking as sharp devaluation in PKR hurts demand (autos) and increases potential exchange losses.

“With the index breaking the 44,000 psychological barrier in today's session, we expect more gains to follow through with the rupee depreciation possibly facilitating fresh portfolio investments from foreign institutional investments (FIIs).”

Moreover, this also bodes well for the upcoming amnesty scheme, aimed at legalising and channeling back offshore assets parked by Pakistanis, he added.

Overall, trading volumes increased to 220 million shares compared with Monday's tally of 116 million. Shares of 382 companies were traded. At the end of the day, 224 stocks closed higher, 140 declined while 18 remained unchanged. The value of shares traded during the day was Rs10.98 billion.



Nimir Resins was the volume leader with 15.2 million shares, gaining Rs0.58 to close at Rs11.69. It was followed by TRG Pak Ltd with 13.4 million shares, gaining Rs1.41 to close at Rs36.81 and Lotte Chemical with 13.2 million shares, losing Rs0.26 to close at Rs10.09.

Foreign institutional investors were net sellers of Rs486.5 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.