Market watch: Stocks edge up after two days of losses

Benchmark index increases 13.67 points to settle at 32,972.02

KARACHI: Bears retreated as the stock market advanced slightly after two days of losses in a see-saw session on Tuesday in anticipation of monetary policy announcement.

The KSE-100 index opened downwards but mixed sentiments were seen in early trading hours. The index dropped to an intra-day low of 32,604.64 points as selling pressure persisted.

Trading volumes finally picked up as the market geared up for a likely hike in interest rate. In the later session, recovery was seen on the back of strong valuations of selected auto, oil and bank stocks. Cement and exploration and production sectors also helped the market move upwards.

At the end of trading, the benchmark KSE 100-share Index recorded an increase of 13.67 points, or 0.04%, to settle at 32,972.02.

According to a report of Aba Ali Habib Research, the bourse halted the bearish momentum and added 14 points during the trading session.

"The benchmark index started the day with mixed sentiments, however, it dropped over 355 points in midday trading before closing slightly in the green zone. The bourse recorded higher trading volumes in anticipation of monetary policy committee's meeting scheduled for Tuesday," the report stated.

During after-hours trading, the State Bank raised the interest rate by 100 basis points to 13.25% for the next two months.

Some of the major stocks responsible for pushing the index higher were UBL (+Rs2.32), Lucky Cement (+Rs8.50), HBL (+Rs1.44), Engro (+Rs2.54) and MCB Bank (+Rs1.70).

Sector-wise, the commercial bank sector remained in the limelight on expectations of a hike in the key policy rate. Cement stocks outshined with trading volumes of 27 million shares, followed by the power generation and distribution sector (22 million).

JS Global analyst Maaz Mulla said the day started with the same sentiment as in the last closing session. The market remained in the red zone in the first half, hitting an intra-day low of 354 points on the likelihood of redemptions by mutual funds.

"However, rumours of no change in interest rate flowed into the market, which turned it green for some hours and the KSE-100 touched the intra-day high at 135 points after which profit-booking set in," the analyst said.

The cement sector recovered in the latter half of the day in the wake of rumours of no change in interest rate. Maple Leaf Cement (+0.2%), DG Khan Cement (-1.5%), Pioneer Cement (+3%) and Lucky Cement (+2.3%) were major movers of the sector.

Mixed sentiments were seen in the financial sector as MCB Bank (+1%) and UBL (+1.6%) remained in the black while NBP (-0.1%) closed lower.

"Moving forward, we recommend investors to react as per change in the interest rate," Mulla said.

Overall, trading volumes jumped 100% to 138.7 million shares compared with Monday's tally of 69.2 million. The value of shares traded during the day was Rs4.5 billion.

Shares of 316 companies were traded. At the end of the day, 148 stocks closed higher, 149 declined and 19 remained unchanged.

K-Electric was the volume leader with 20.3 million shares, losing Rs0.10 to close at Rs3.71. It was followed by Maple Leaf Cement with 14 million shares, gaining Rs0.05 to close at Rs21.07 and TRG Pakistan with 12.9 million shares, losing Rs0.07 to close at Rs14.29.

Foreign institutional investors were net sellers of Rs17.1 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.