Stocks surged in a rally on Monday as the benchmark index powered past the 38,000-point barrier following the State Bank of Pakistan’s (SBP) decision to defer monetary policy announcement for two months.
Building on gains made in the preceding session, the KSE-100 index marched upwards throughout the day. Investors reacted with enthusiasm to the central bank’s move of putting off the interest rate announcement till September, which encouraged market players to go long on stocks.
Moreover, expectations of better financial results in the banking sector and release of fertiliser data, which showed an increase in urea sales, spurred buying interest. The declining trend in fresh Covid-19 infections and death rate also built confidence and lifted the index higher as expectations of a complete end to the lockdown grew.
On the international front, traders were spooked by tensions between the US and China, and rising number of coronavirus cases, which were prompting a second wave of lockdown in some economies.
Gold prices rocketed to a record high on Monday with perturbed investors rushing towards the safe-haven metal as the coronavirus spread across the globe, while a weaker dollar also provided strong support.
The developments pushed investors to flee towards the safety of gold, which surged to record highs in the global market.
At close, the benchmark KSE-100 index recorded an increase of 613.54 points, or 1.63%, to settle at 38,221.16 points.
In its report, Arif Habib Limited stated, “Anticipation of a further rate cut died down with the SBP’s decision and investors were viewing it as a signal of interest rate bottoming out.”
Among banking sector stocks, HBL rallied and traded near its upper circuit after posting better earnings on Friday last week. UBL was scheduled to declare financial results in the first week of August, which gave another reason to banks to perform well in the market.
Besides banks, the cement sector rebounded after giving in to selling pressure in the previous week, the report added.
JS Global analyst Maaz Mulla said, “Bears were defeated in Monday’s trading session as the benchmark index opened positive and touched a high of 684 points as institutional participation was witnessed in main board stocks.”
Fauji Fertiliser Company (+0.9%) declared its 1HCY20 result, where the company posted earnings per share (EPS) of Rs7.69 and cash payout of Rs2.75 per share.
The cement sector gained ground where DG Khan Cement (+3.4%), Lucky Cement (+2.5%), Kohat Cement (+1.5%), Cherat Cement (+2.7%), Pioneer Cement (+2.2%) and Maple Leaf Cement (+1%) were the major movers.
The banking sector also enjoyed the upward trend where Meezan Bank (+6.7%), Bank AL Habib (+5.4%), HBL (+5.1%) and UBL (+2.4%) remained in the green zone.
“Moving forward, we recommend investors to book profit on strength as pressure is expected in the rollover week,” Mulla added.
Overall, trading volumes increased to 288.1 million shares compared with Friday’s tally of 266.5 million. The value of shares traded during the day was Rs13.3 billion.
Shares of 376 companies were traded. At the end of the day, 232 stocks closed higher, 129 declined and 15 remained unchanged.
Pak Elektron was the volume leader with 28.9 million shares, gaining Rs1.88 to close at Rs30.79. It was followed by TRG Pakistan with 19.9 million shares, gaining Rs2.87 to close at Rs41.15 and Pak Refinery with 18.5 million shares, losing Rs0.61 to close at Rs13.05.
Foreign institutional investors were net sellers of Rs543.5 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.
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Good analysis.
V. Informative.
Wow, that is good news. This brings respite to a lot investors.