PSX cheers rate cut, IMF meeting schedule

KARACHI:

Pakistan Stock Exchange (PSX) cheered a significant reduction in the central bank's policy rate and the announcement of date for the International Monetary Fund (IMF) board meeting as investors vied to buy lucrative stocks, sending the KSE-100 index higher by over 300 points.

In the morning, trading began with a sharp spike, when the index reached its intra-day high of 80,016.74 points. At that point, the market dipped owing to profit-taking at higher valuations.

The index rose again and remained at elevated levels well after midday break as investors took cue from a hefty cut of 200 basis points in the State Bank of Pakistan's (SBP) policy rate and the IMF's announcement that it would consider Pakistan's loan case on September 25.

A stable Pakistani rupee and further increase in the country's foreign currency reserves were the other triggers for the market players to build their stock portfolios.

"Stocks closed bullish after the SBP slashed the key policy rate by 200 basis points to 17.5% amid falling inflation and the IMF's announcement that its executive board is likely to approve a $7 billion loan programme on September 25," said Ahsan Mehanti, MD of Arif Habib Corp.

"The finance minister's affirmation of meeting all the IMF conditions, $2 billion in external financing from friendly countries, a strong rupee, and surging forex reserves were the other catalysts for bullish close at the PSX."

At the end of trading, the KSE-100 index posted gains of 315.44 points, or 0.40%, and settled at 79,333.06.

Topline Securities, in its report, wrote that a 200-basis-point cut in policy rate, which exceeded the street expectation of a 150-basis-point reduction, and the IMF board scheduling a meeting on September 25 to discuss Pakistan's case, were the two key catalysts for the bullish trend at the PSX.

The market reached its intra-day high of 80,017, up 999 points, or 1.27%, during early trading hours. However, resistance above the 80,000 level led to a sell-off, causing the KSE-100 to close at 79,333, up 315 points, Topline said.

Arif Habib Limited (AHL) commented that the market opened with a sharp rise, briefly reaching the 80,000 level. Afterwards, it experienced a decline for the rest of the day, resulting in losses for early buyers.

Some 49 shares rose and another 49 fell with the biggest positive contribution to the index coming from Engro Fertilisers (+2.54%), Oil and Gas Development Company (+2.54%) and Fauji Fertiliser (+1.29%).

The largest index drags were United Bank (-0.75%), Meezan Bank (-0.81%) and DG Khan Cement (-4.24%), it said.

The KSE-100 gained 0.45% week-on-week and stood above 79k, which had been a stubborn resistance level. "The outlook for the coming week is positive with expectations of targeting 82,000 as long as the index stays above 78,000," AHL added.

JS Global analyst Mubashir Anis Naviwala, in his review, observed that bulls took charge as the market welcomed the rate cut, propelling the index to the high of 80,017 points.

Strong price performance was witnessed across the board with the PSX closing at 79,333, up 315 points, he said.

Overall trading volumes increased to 916.1 million shares compared with Thursday's tally of 584.3 million. The value of shares traded during the day stood at Rs21.2 billion.

Shares of 438 companies were traded. Of these, 184 rose, 211 declined and 43 remained unchanged.

WorldCall Telecom was the volume leader with trading in 87.8 million shares, losing Rs0.05 to close at Rs1.38. It was followed by Pervez Ahmed Consultancy with 75.9 million shares, gaining Rs0.68 to close at Rs2.03 and Kohinoor Spinning Mills with 63.8 million shares, losing Rs0.46 to close at Rs8.41.

During the trading session, foreign investors sold shares worth Rs803.7 million, according to the NCCPL.