KARACHI: The stock market on Monday staged a grand rally with the KSE-100 index recovering 1,566 points, or 3.22 per cent, to settle at 50,121 points.

This followed on the heels of the last week’s biggest-ever weekly loss of 4,082 points and the largest-ever single-day decline of 1,811 points, or 3.58pc, last Thursday when Pakistan’s upgrade to the MSCI Emerging Markets Index took place.

But analysts were arguing whether the sharp recovery on Monday was sustainable or represented the ‘dead cat bounce’ phenomenon—described as temporary recovery in share prices after huge falls, as speculators buy in order to cover their positions.

The volume increased 15pc over the preceding session to 255 million shares. It was lower than the 10-day moving average of 349m shares. The traded value decreased 12pc to Rs13.9 billion.

Topline Securities stated that the preceding week’s sharp dip reopened attractive valuations, as evident by across-the-board buying activity, with early reports suggesting strong institutional support.

Top 10 index-point leaders were Habib Bank that went up 4.2pc, United Bank 5pc, Engro Corporation 4.8pc, Lucky Cement 3.5pc, Pakistan Petroleum 3.4pc, D.G. Khan Cement 4.9pc, Sui Northern Gas Pipelines 5pc, Dawood Hercules 4.9pc, MCB Bank 2.6pc and Bank Al Habib 5pc, which contributed 706 points to the index.

Analysts at JS Global observed that banking heavyweights cumulatively contributed 320 points to the KSE-100 index.

On the back of news about the deferment of a decrease in duty on imported cars, stocks in the auto sector witnessed a rally and Pak Suzuki, Indus Motor and Honda Atlas Cars closed on their respective upper circuits.

The decrease in GST to 5pc from 16pc for the construction industry in Punjab provided cement and steel sectors with a stimulus.

Published in Dawn, June 6th, 2017