KARACHI: Investors in the stock market find themselves in a quandary these days: will the State Bank of Pakistan (SBP) cut the benchmark interest rate, or will it not? A lot weighs on that speculation, as the banking sector’s profitability, or that of highly-leveraged companies, will be determined by what the country’s top money-managers decide in the coming week.
This confusion manifested itself in the stock market on Friday, as investors turned their attention to recently neglected banking scrips, betting that the government’s decision to raise the wheat support price will drive up inflation again and force SBP to withhold a rate cut.
“Pakistani equities closed positive, led by banks, as the market is betting that SBP will likely not slash the policy rate further,” said Faisal Bilwani, analyst at Elixir Securities. “Banks that have been lagging are back in focus.”
“The highlight of the day was positive movement of the banking sector, as rumours started circulating between investors of a possible cut in the minimum deposit rate, to be announced with the monetary policy,” added JS Global analyst Fahad Ali.
Shares of 379 companies were traded on Friday. At the end of the day 150 stocks closed higher, 188 declined while 41 remained unchanged. Trade volumes improved to 312 million shares compared with Thursday’s tally of 256 million shares. The value of shares traded during the day was Rs6.74 billion.
The Karachi Stock Exchange’s (KSE) benchmark 100-share index gained 0.28% or 46.78 points to end at the 16,573.86 points level.
“National Bank hit its upper lock, while United Bank also gained 3.4% on reported foreign buying,” reported Bilwani. “Payout excitement will continue to keep banks in the limelight,” he noted.
Fauji Cement was the volume leader with 89.17 million shares gaining Rs0.11 to finish at Rs6.95. It was followed by Jahangir Siddiqui & Company with 27.71 million shares gaining Rs0.58 to close at Rs17.23 and the Karachi Electric Supply Company with 17.51 million shares losing Rs0.05 to close at Rs6.88.
“The mighty Unilever tested some nerves today, as it swung from its upper limit to close down 5%, as investors speculate that the buyback price may be revised,” added Bilwani.
Foreign institutional
investors were net buyers of Rs8.11 million, according to data maintained by the National Clearing Company of Pakistan Limited.
Published in The Express Tribune, December 1st, 2012.
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