Stocks rally ahead of interest rate cut

KARACHI: Shrugging off overnight gloomy conditions stemming from mounting political tensions and a delay in loan approval by the IMF board, the equities staged a recovery ahead of the announcement of an anticipated cut in the interest rate, propelling the index above 79,000 on Thursday.
Ahsan Mehanti of Arif Habib Corporation said stocks closed bullish amid speculations over SBP key policy rate announcement.
He said a steady rupee, falling inflation, surging remittances and exports, and an expected resolution of the external financing gap for securing IMF’s board approval for a 37-month $7bn Extended Fund Facility boosted investor confidence.
In its review, Topline Securities observed that contrary to the overnight bearish trend, stocks began trading on a bullish note ahead of the SBP’s Monetary Policy Commit­tee meeting, scheduled for an announcement later in the evening.
The KSE-100 index sustained positive momentum throughout the session, closing at 79,017.62 points, marking a gain of 365.82 points or 0.47pc day-on-day.
Broad-based buying was observed in blue-chip stocks, driven by widespread market expectations of a 100-150 basis points reduction in the key interest rate, backed by declining inflation and improved macroeconomic indicators.
Key heavyweights such as United Bank, Fauji Fertiliser, Fauji Cement, Oil and Gas Development Company and Hub Power posted significant gains, collectively contributing 236 points to the index’s rise.
Investor sentiment remained particularly strong in the cement sector, with heightened expectations surrounding the upcoming monetary policy decision later in the day, where a rate cut was widely anticipated.
The trading volume rose 9.67pc to 584.27 million shares, and the traded value increased by 11.04pc to Rs16.36bn day-on-day.
Stocks contributing significantly to the traded volume included Kohinoor Spinning (60.74m shares), Worldcall Telecom (57.97m shares), TPL Properties (32.49m shares), TPL Corp (29.66m shares) and Agritech Ltd (27.90m shares).
The shares registering the most significant increases in their prices in absolute terms were Pakistan Tobacco (Rs49.07), Unilever Foods (Rs48.00), Rafhan Maize (Rs33.50), Hallmark Company (Rs30.71) and Nestle Pakistan (Rs29.50).
The companies that suffered major losses in their share prices in absolute terms were Mari Petroleum (Rs83.34), Pakistan Eng (Rs37.77), JDW Sugar Mills (Rs30.25), Thal Ltd (Rs19.95) and Haleon Pakistan (Rs12.96).
Foreign investors turned net buyers as they purchased shares worth $0.70m.
Published in Dawn, September 13th, 2024