Market Watch: Banks hit, but index recovers slightly

Benchmark 100-share index gains 101.60 points.

KARACHI: Providing some much-needed relief, the monetary policy announcement over the weekend, where the government reduced the discount rate to a 42-year low, helped the index end in the black amid reasonably moderate volumes.

Despite pressure on the banking sector, auto and oil managed to steer the market upwards.

At close on Monday, the Karachi Stock Exchange (KSE) benchmark 100-share index increased 0.31% or 101.60 points to end at 32,707.22.

Elixir Securities analyst Sibtain Mustafa said the bourse experienced a choppy day despite the central bank cutting the discount rate by 100 basis points to bring it to 7%.



“The SBP also introduced a target rate where the ceiling is capped at 6.5% and the floor is set at 5%,” said Mustafa.

“This was a surprise move for participants as it is expected to put pressure on banks’ earnings where analysts expect earnings per share to erode by 5-20% in the year 2016.”

Topline Securities analyst said that an above expectation cut of 1% in interest rate brought renewed interest across the board.

“KSE-100 index, however, closed marginally positive as index-heavy banks declined sharply.”

MCB,UBL, BAHL,HBL,NBP, BAFL and ABL collectively weighed the index down by 300 points.

Additionally, auto assemblers also witnessed renewed interest amid the depreciating yen against the dollar.

Trade volumes rose to 179 million shares compared to 75 million on Friday.

Shares of 332 companies were traded on Monday. Of these, 192 companies closed higher, 127 fell and 13 remained unchanged. The value of shares traded during the day was Rs10.5 billion.



Pak Elektron was the volume leaders with 27.2 million shares, gaining Rs3.10 to close at Rs65.14. It was followed by Fauji Cement with 15.4 million shares, gaining Rs1.06 to close at Rs33.18 and Maple Leaf Cement with 12 million shares, gaining Rs3.06 to close at Rs65.49.

Foreign institutional investors were net sellers of Rs91 million worth of shares during the session, according to data compiled by the National Clearing Company of Pakistan.

Published in The Express Tribune, May 26^th, 2015.

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