Market Watch: Bourse recoups some losses on rate cut hopes

Benchmark 100-share index rises 188.29 points

KARACHI: As expectations rose for a 50-basis-point cut in interest rate in the upcoming monetary policy, the bourse made a marginal recovery on Thursday.

Uncertainty after Wednesday’s terror attack in Karachi settled and investors showed interest in much-needed activity. At close, the Karachi Stock Exchange’s (KSE) benchmark 100-share index recorded a rise of 0.57% or 188.29 points to end at 33,103.73.

Elixir Securities analyst Faisal Bilwani said equities rebounded albeit with low volumes.



“A major contributor was the positive news about the prime minister’s decision of taking parliamentary leaders into confidence over the economic corridor,” he said. “This brought along fresh institutional money, while panic over Wednesday’s terrorist attack subsided.”

The momentum was somewhat supported by moves in the debt market where returns on treasury bills dropped by 44 basis points.

“This encouraged institutional players to hunt for value players as a 50-basis-point rate cut is now imminent in the monetary policy,” said Bilwani.

Overall, trading activity remained confined to second and third-tier stocks with some interest in blue-chip counters primarily the yield plays.



An analyst at Topline Securities stated that expectations of monetary easing pushed the KSE-100 index higher with increasing volumes.

Foreigners bought shares worth $10.6 million while they sold shares worth $7.4 million with net buying at $3.1 million. “Major buying by foreigners was seen in banking and oil sectors.”

Trade volumes rose to 213 million shares compared to 154 million on Wednesday.

Shares of 344 companies were traded. Of these, 216 companies closed higher, 102 saw a decline and 26 remained unchanged. The value of shares traded during the day was Rs9.8 billion.

Byco Petroleum was the volume leader with 32.4 million shares, gaining Rs0.98 to close at Rs14.09. It was followed by Ghani Automobile with 15.1 million shares, gaining Rs0.14 to close at Rs6.98 and Pak Elektron with 13.4 million shares, gaining Rs1.71 to close at Rs62.92.

Foreign institutional investors were net buyers of Rs311 million worth of shares during the session, according to data compiled by the National Clearing Company of Pakistan.

Published in The Express Tribune, May 15^th, 2015.

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