Market watch: KSE-100 rises 319 points on rate cut expectation

Benchmark index advances 0.96% to settle at 33,603.02


​ Our Correspondent May 12, 2020
Benchmark index advances 0.96% to settle at 33,603.02. PHOTO: AFP

KARACHI: Bulls maintained their grip at the stock market on Tuesday and helped it advance 319 points as investors pinned hopes on the forthcoming Morgan Stanley Capital International (MSCI) review due in the early hours of Wednesday.

A few market participants expected Pakistan would keep its place in the Emerging Markets Index while some speculated that the country would be downgraded and put in the Frontier Markets Index.

The market rose due to a few positive triggers that strengthened investor sentiment during the trading session.

Late on Monday, Prime Minister Imran Khan directed the government to expedite construction work on the Diamer-Bhasha dam, which fueled investors’ interest in cement and steel sectors and stocks in both categories ended with handsome gains.

In addition to that, the investors anticipated another cut in the policy rate in the monetary policy announcement on Friday, which lent further support to the index.

Earlier, trading began with a sharp spike and the positive mood helped the index power past 33,500 points. A few dips were witnessed till midday, however, the investors managed to correct them aptly.

The positive triggers sparked a rally towards the end, which aided the index to end the day with modest gains.

At close, the benchmark KSE-100 index recorded an increase of 319.23 points, or 0.96%, to settle at 33,603.02.

Arif Habib Limited, in its report, stated that the market remained positive on the prospect of further rate cut for which the SBP would make a decision on Friday, and the government’s move to construct dams that was likely to generate demand for cement and steel.

“Resultantly, cement and steel sectors led the advance, and most of their stocks traded near their upper circuits, generating high trading volumes,” it said. “Stocks of banking and oil and gas sectors could not generate much interest amongst investors.”

The cement sector topped the volumes chart with trading in 75.8 million shares, followed by technology firms (28.6 million) and vanaspati manufacturers (23.1 million), the report said.

JS Global analyst Maaz Mulla said equities concluded the session on a positive note with the benchmark KSE-100 index gaining 1% (+319 points) at 33,603.

“Value buying was witnessed with interest from institutions and individuals,” he said. Traded value stood at $46 million and volumes came in at 224 million shares, up 13%.

“On the economic front, the monetary policy committee is meeting this Friday with expectations of another cut in the policy rate,” he said.

Among other news, Prime Minister Imran Khan directed immediate commencement of work for the construction of Diamer-Bhasha dam and called water security a priority of the government.

Cement stocks rallied with Pioneer Cement (+7.3%), Cherat Cement (+6.9%), Maple Leaf Cement (+6.7%), DG Khan Cement (+6.9%), Lucky Cement (+4%) and Fauji Cement (+6.6%) being major movers of the sector.

Furthermore, HBL (+1.9%), UBL (+1.3%) and MCB (+2) from the banking space closed higher.

A rally was witnessed in the steel sector where Amreli Steels (+4.3%), International Steels (+4.5%), Mughal Iron and Steel Industries (+5.2%) and International Industries (+2.3%) closed in the green.

“Moving forward, we expect the market to trade sideways as the consolidation phase continues. However, investors should take the opportunity to accumulate stocks as the medium to long-term trend remains bullish,” the analyst said.

Overall, trading volumes increased to 224.5 million shares compared with Monday’s tally of 198.2 million. The value of shares traded during the day was Rs7.4 billion.

Shares of 345 companies were traded. At the end of the day, 204 stocks closed higher, 124 declined and 17 remained unchanged.

Maple Leaf Cement was the volume leader with 28.7 million shares, gaining Rs1.73 to close at Rs27.41. It was followed by Unity Foods with 23.1 million shares, losing Rs0.30 to close at Rs12.85 and Fauji Cement with 19.1 million shares, gaining Rs1.11 to close at Rs17.91.

Foreign institutional investors were net sellers of Rs243.2 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.

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