KARACHI: The surprise devaluation of the rupee by 4 per cent against the US dollar sent stock prices soaring mainly in the dollar-hedged sectors, which went on to fuel the rally across the board.
The KSE-100 index stormed past several barriers to record gains of 770.14 points (1.77pc) and close at 44,309.74 on Tuesday. Analysts at Arif Habib Ltd observed that the rupee depreciation against the dollar was the largest single day movement since 2008.
Analysts generally applauded the surprise second such intervention by the State Bank of Pakistan in three months as they believed the devaluation would provide some respite to the worsening balance of payment position.
Market participants battered by long period of uncertainty and lack of triggers entered the market in droves, which saw the trading volume surge 90pc over the earlier day to 220 million shares. The traded value jumped 110pc to Rs11 billion.
The demand for dollar-hedged stocks rose by hot cakes as investors anticipated improved returns going forward. Cement stocks also rose, adding 57 points, underpinned by reports of further increase in cement prices by Rs10 per bag, taking cumulative price increase to Rs40 per bag in the last few weeks.
In the lead of mutual funds which bought stocks worth net $6.3m, stocks in exploration and production, textiles and independent power producers followed, together contributing 217 points.
Banks were the major gainers which alone contributed 413 points to the index as investors anticipated a rise in policy rate in response to expected higher inflation.
Top-five contributors were United Bank, up 4.7pc, Habib Bank 3pc, MCB Bank 4.5pc, Pakistan petroleum 3.6pc Bank Alfalah 5pc, together adding 390 points to the index gains. On the flipside, Philip Morris Pakistan, down 5pc, Pak Suzuki Motor 3.7pc, Bata Pakistan 5pc, Honda Atlas Cars 1.6pc and Engro Fertilisers 0.5pc bruised the index lightly by 32 points.
Published in Dawn, March 21st, 2018
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