Market watch: Stable interest rate lifts KSE-100 index

Benchmark index rises 230.84 points to settle at 39,863.36

KARACHI:

Pakistan Stock Exchange turned bullish on Tuesday as market participants welcomed the status quo maintained by the State Bank in the monetary policy announcement a day ago.

As a result, the KSE-100 index climbed 231 points and inched closer to the 40,000-point mark.

In line with market expectations, the State Bank of Pakistan left its key policy rate unchanged, which was cherished by stock investors.

Additionally, the international oil prices climbed to near pre-Covid levels, which acted as a positive trigger and enticed investors to accumulate oil sector stocks. Consequently, both oil-related sectors at the Pakistan bourse closed the session entirely in the green.

On the other hand, a selling spell in the cement sector wiped off the gains and restrained the market from posting an extraordinary increase.

Earlier, stock trading began with a spike and the KSE-100 index maintained the upward momentum till midday. Afterwards, a selling spree emerged, pulling the market down.

Strong investor optimism following the status quo in the monetary policy helped the market advance in final hours.

At close, the benchmark KSE-100 index recorded an increase of 230.84 points, or 0.58%, to settle at 39,863.36 points.

Arif Habib Limited, in its report, stated that the market traded in the positive zone, even though the government had announced a lockdown and school closure on Monday.

“A consistent increase in international crude oil prices helped exploration and production stocks stage a comeback; banks and oil and gas marketing companies also traded positively for most part of the session,” it said.

The cement sector saw selling pressure, which came on the back of anticipation of a slow growth in cement dispatches due to winter season. Stocks of the cement sector traded at a discount of 12-18% from their respective recent peaks.

By the end of the session, renewed buying interest was seen in the cement sector, which pushed the index up by 231 points. Trading volumes remained below 200 million shares, the report said.

JS Global analyst Maaz Mulla said Pakistan Stock Exchange showed some signs of a recovery as the KSE-100 index hit intra-day high of +389 points and closed at 39,863, up 231 points.

“The positive impact came mainly due to the decision of the Monetary Policy Committee to keep the policy rate unchanged at 7%,” he said.

A total of 175 million shares were traded in the day. Top contributors to the total volume were Unity Foods (+2%), TRG Pakistan (+1.7%), Maple Leaf Cement (-0.9%), Hum Network (+6.7%) and Pakistan Refinery (+1.4%) with a cumulative 65 million shares changing hands.

“However, a rapid increase in coronavirus cases can be a threat to the economy as it may lead to a lockdown,” the analyst said. “The government of Sindh has restricted working hours from 6am to 6pm for local markets.”

Pakistan Oilfields (+2.2%), Oil and Gas Development Company (+1.2%) and Pakistan Petroleum (+0.8%) from the exploration and production sector moved higher as crude oil prices rose in the international market.

Moreover, steel and refinery sectors saw some recovery where Aisha Steel Mills (+4.7%), Amreli Steels (+0.4%), Mughal Iron and Steel (+2.6%), Attock Refinery (+0.7%) and National Refinery (+1.3%) closed in the green.

“Moving forward, we expect the market to remain bearish due to political uncertainty and global rise in corona cases. Hence, we recommend investors to avail any opportunity to buy on dips,” the analyst said.

Overall, trading volumes dropped to 174.7 million shares compared with Monday’s tally of 195.5 million. The value of shares traded during the day was Rs6.8 billion.

Shares of 377 companies were traded. At the end of the day, 211 stocks closed higher, 137 declined and 29 remained unchanged.

Unity Foods was the volume leader with 19 million shares, gaining Rs0.46 to close at Rs23.58. It was followed by Maple Leaf Cement with 14.5 million shares, losing Rs0.33 to close at Rs37.08 and TRG Pakistan with 12.7 million shares, gaining Rs0.87 to close at Rs51.98.

Foreign institutional investors were net sellers of Rs148.1 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.