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

Benchmark index gains 203.43 points to settle at 34,008.33

​ Our Correspondent May 15, 2020
Benchmark index gains 203.43 points to settle at 34,008.33. PHOTO: AFP

KARACHI: Bulls continued to dominate the stock market as the KSE-100 index rallied and gained over 200 points on Friday. The bourse managed to cross the 34,000-point mark.

The increase was attributed mainly to speculation that the central bank would slash the policy rate in its monetary policy announcement later in the day.

Moreover, a surge in global crude oil prices coupled with concern over growing fiscal deficit and negative economic growth dented investors’ sentiment.

Earlier, trading began on a positive note and a buying spree emerged shortly afterwards due to robust investor sentiment. A few dips were seen, which were corrected immediately. The uptrend continued till the end of trading with the KSE-100 index finishing the week with handsome gains.

At close, the benchmark KSE-100 index recorded an increase of 203.43 points, or 0.60%, to settle at 34,008.33.

Arif Habib Limited, in its report, stated that the market opened on a positive note with +89 points and went up 236 points during the day. It closed with a rise of 203 points at 34,008.

“A bounce in international crude prices helped oil and gas stocks to stage some recovery from recent sessions. Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) particularly performed well,” it said.

In the anticipation of rate cut by the central bank, the cement sector also fared well, though it posted limited gains.

“Ferozsons Laboratories continued its ascent on the back of its arrangement with Gilead for the manufacturing of Remdesivir (for treating coronavirus), and hit its upper cap consecutively in the past several sessions,” the report added.

Banking-sector stocks remained subdued on the prospect of rate cut, however, active buying interest was noted in both The Bank of Punjab and Habib Bank Limited (HBL), which have performed well since the beginning of the week.

The cement sector recorded trading volumes of 29.7 million shares, followed by technology firms (26.3 million) and oil and gas marketing companies (18.8 million).

JS Global analyst Maaz Mulla said bears were defeated in Friday’s session as the market remained in the green zone. “The benchmark index opened positive and touched a high of +236 points as institutional participation was witnessed mainly in main board stocks,” he added.

Positive sentiment could be attributed to attractive valuations of the KSE-100 index stocks, he stated.

“On the news front, Moody’s Investors Service has placed the government of Pakistan’s local and foreign currency long-term issuer and senior unsecured B3 ratings under review for downgrade,” Mulla added.

Buying was largely driven by value-hunters with heavyweights such as Hubco (+3.3%), Mari Petroleum (+4.8%), Pakistan Oilfields (+3.3%), OGDC (+1.7%), PPL (+1.6%) and Lucky Cement (+1.5%) leading the charts.

Moreover, the cement sector closed in the green where DG Khan Cement (+1.8%), Cherat Cement (+6.5%), Pioneer Cement (+2.7%), Kohat Cement (+2%) and Lucky Cement (+1.5%) were the major movers.

“We recommended investors to wait for the announcement of monetary policy and react as per the change in interest rate,” the analyst said.

Overall, trading volumes decreased to 213.3 million shares compared with Thursday’s tally of 240.2 million. The value of shares traded during the day was Rs6.2 billion.

Shares of 339 companies were traded. At the end of the day, 180 stocks closed higher, 146 declined and 13 remained unchanged.

Hascol Petroleum was the volume leader with 14.8 million shares, losing Rs0.25 to close at Rs14.58. It was followed by K-Electric with 12.2 million shares, gaining Rs0.10 to close at Rs3.06 and Maple Leaf Cement with 9.9 million shares, gaining Rs0.11 to close at Rs26.78.

Foreign institutional investors were net sellers of Rs559.12 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.