Market watch: KSE-100 inches up 10 points following hike in interest rate

Benchmark index increases 0.03% to settle at 32,981.99

KARACHI: The mood at the stock market turned sombre on Wednesday as the KSE-100 index ended with a meagre gain of 10 points after clarity emerged over the much-anticipated monetary policy.

The monetary policy committee hiked the key interest rate by 100 basis points to 13.25% on Tuesday. State Bank of Pakistan (SBP) Governor Reza Baqir announced the monetary policy at a press conference.

The market opened on a positive note and touched the intra-day high within minutes but battered sentiments over economic uncertainty dragged the index into the negative territory later.

The index still managed to recover and close with a slight rise. Fertiliser and automobile stocks remained in the negative zone.

According to Ahsan Mehanti of Arif Habib Corp, the stocks closed flat in a volatile session after the central bank policy rate was raised to 13.25% on higher inflation outlook.

Renewed hopes for improved trade ties between Pakistan and the US in the wake of prime minister's visit to Washington next week played the role of a catalyst in lifting the market, he added.

At the end of trading, the benchmark KSE 100-share Index recorded an increase of 9.97 points, or 0.03%, to settle at 32,981.99.

In its report, Arif Habib Limited stated that the market opened on a positive note and within no time touched the day's high of +409 points, post-SBP rate hike of 100 basis points on Tuesday, in line with street consensus.

"Exploration and production, oil and gas marketing, cement, chemical, fertiliser and banking sectors performed well earlier during the day. However, except for oil and gas marketing and chemical stocks, all went bust by the session's end," the report said.

Lotte Chemical, Sui Southern Gas Company, Sui Northern Gas Pipelines and Engro Polymer traded near their upper circuits.

The cement sector led the volumes table with trading in 30 million shares, in which Maple Leaf Cement contributed 16.5 million shares, DG Khan Cement 4.8 million and Fauji Cement 3.5 million.

It was followed by the chemical sector with trading in 15 million shares, in which Lotte Chemical had a share of 8.2 million shares, the report concluded.

In its report, Aba Ali Habib Securities said the KSE-100 index opened on a positive note despite the 100-basis-point hike in the key policy rate and touched the intra-day high of 409 points before settling at 32,981.99 with a gain of merely 9.97 points.

"The rate hike, which came into effect on Wednesday, may exacerbate cost pressure on highly leverage sectors and the overall economy, however, SBP Governor Reza Baqir's less hawkish remarks indicate a less aggressive monetary action going forward," it said.

Investor sentiments were positive as the expected hike was already priced in stock prices. The index found support and resistance at 32,835.05 points and 33,381.32 points respectively, the report added.

Overall, trading volumes decreased to 111.6 million shares compared with Tuesday's tally of 138.7 million. The value of shares traded during the day was Rs3.7 billion.

Shares of 308 companies were traded. At the end of the day, 145 stocks closed higher, 146 declined and 17 remained unchanged.

Maple Leaf Cement was the volume leader with 16.6 million shares, staying stable at Rs21.07. It was followed by TRG Pakistan with 10.8 million shares, losing Rs0.65 to close at Rs13.64 and Lotte Chemical with 8.2 million shares, gaining Rs0.89 to close at Rs16.72.

Foreign institutional investors were net buyers of Rs73.95 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.