Market watch: KSE-100 rebounds on hopes of policy rate cut

Benchmark index increases 475.71 points to close at 39,382.11

KARACHI: After two sessions of bearish trade, Pakistan bourse turned bullish on Thursday as investors cheered falling bond yields and speculated that the central bank would slash the policy rate in its monetary policy announcement later this month.

In the auction of Pakistan Investment Bonds (PIBs), which took place on Wednesday, yields of three, five and 10-year papers fell, which led investors to pin hopes on an interest rate cut by the central bank in March.

Trading volumes and value soared as market participants resorted to across-the-board share trading.

Earlier, trading began with a spike and stocks rallied in a buying spree. Some of the gains were, however, erased after midday. Nevertheless, the index closed with handsome gains.

At close, the benchmark KSE-100 index recorded an increase of 475.71 points, or 1.22%, to settle at 39,382.11.

JS Global analyst Maaz Mulla said bears were defeated in Thursday's session as the market registered a handsome recovery.

"The benchmark index opened positive and touched a high of +836 points as institutional participation was witnessed mainly in main board stocks," he said. "The market remained in the green throughout the day and closed at 39,382 (+476 points)."

Positive investor sentiment could be attributed to attractive valuations of stocks that were part of the KSE-100 index, the analyst said.

Overall volumes stood at 341 million shares while traded value came in at $86 million.

Fauji Cement (+6.7%), Unity Foods (-0.2%) and Pakistan International Bulk Terminal (+8.7%) cumulatively contributed more than 77 million shares to the total volume.

Buying was largely driven by value-hunters with heavyweights such as Lucky Cement (+6.2%), Engro (+3.4%), Hubco (+2.9%), MCB (+1.8%), Pakistan Petroleum (+2.6%), Fauji Fertiliser (+2.4%) and PSO (+3%) leading the charts.

The cement sector enjoyed an upward trend where Kohat Cement (+7%), Cherat Cement (+6.9%), Pioneer Cement (+7%), Fauji Cement (+6.7%), Maple Leaf Cement (+6%), DG Khan Cement (+5.6%) and Lucky Cement (+6.2%) were the major movers.

"Moving ahead, we expect the market to remain positive in the medium term. However, profit-taking cannot be ruled out in the short term," the analyst added.

Overall, trading volumes increased to 340.7 million shares compared with Wednesday's tally of 187 million. The value of shares traded during the day was Rs13.3 billion.

Shares of 370 companies were traded. At the end of the day, 253 stocks closed higher, 102 declined and 15 remained unchanged.

Fauji Cement was the volume leader with 30 million shares, gaining Rs1.13 to close at Rs17.88. It was followed by Unity Foods with 26 million shares, losing Rs0.03 to close at Rs14.02 and Pakistan International Bulk Terminal with 21.5 million shares, gaining Rs0.91 to close at Rs11.39.

Foreign institutional investors were net sellers of Rs489.9 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.