Market watch: KSE-100 gains on back of encouraging inflation data

Benchmark index rises 435.05 points to settle at 30,244.73

KARACHI: The stock market reversed its trend on Wednesday and closed with a handsome gain of 435 points on the back of lower-than-expected inflation reading, which provided a boost to investor sentiments.

The KSE-100 kicked off trading on a negative note, with the index dipping to hit an intra-day low in the initial hours. However, strong investor sentiments arising from encouraging inflation data helped the market recover and close above the 30,000-point mark.

At close, the benchmark KSE 100-share Index recorded an increase of 435.05 points, or 1.46%, to settle at 30,244.73 points.

Arif Habib Limited, in its report, stated that release of CPI data proved to be the required stimulus that investors were waiting for.

"Latest release of CPI indicates a lower-than-anticipated reading and gave confidence to the view that the State Bank of Pakistan will likely consider revising down the policy rate," it said.

Buying activity was observed almost across the board with the exception of the banking sector scrips, which kept the blue-chips in the sector in red and the main reason behind the 342 points decline earlier in the session.

Cement sector led the upsurge in index, which was supported by oil and gas marketing companies and exploration and production sectors where Oil and Gas Development Company and Pakistan Petroleum also hit upper circuit.

JS Global analyst Maaz Mulla said the market witnessed major recovery on Wednesday after making an intra-day low of 341 points.

"This recovery came after the announcement of CPI for the month of August, which clocked-in at 10.50% year-on-year (11.60% year-on-year on the old base)," he said.

"Since the rebasing led to a lower CPI number, it filled the market with hope of possible interest rate cuts earlier than previously hoped, resulting in some positive sentiment."

Major heavyweights, which lifted the index, were Engro (+3.5%), Oil and Gas Development Company (+3.8%), Pakistan Petroleum (+4.2%), Lucky Cement (+4.8%) and MCB (+2.7%).

Cement stocks mostly closed on their respective upper lock where DG Khan Cement (+5.0%), Lucky Cement (+4.8%), Maple Leaf Cement (+5.8%), Pioneer Cement (+4.9%) and Kohat Cement (+4.2%) were the major movers of the mentioned sector.

Investor interest was seen in the exploration and production sector where Pakistan Petroleum (+4.2%), Oil and Gas Development Company (+3.8%) and Pakistan Oilfields (+2.6%) closed in the green zone.

"Moving ahead, we expect market to remain volatile due to geo-political tension. We recommend investors to stay cautious at current levels," the analyst added.

Overall, trading volumes increased to 128.8 million shares compared with Tuesday's tally of 64.04 million. The value of shares traded during the day was Rs4.9 billion.

Shares of 341 companies were traded. At the end of the day, 238 stocks closed higher, 81 declined and 22 remained unchanged.

Maple Leaf Cement was the volume leader with 11.5 million shares, gaining Re1 to close at Rs18.2. It was followed by Fauji Cement with 9.9 million shares, gaining Rs0.58 to close at Rs14.09 and Unity Foods with 9.4 million shares, gaining Rs0.58 to close at Rs8.65.

Foreign institutional investors were net sellers of Rs730.5 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.