KARACHI: The stock market staged a massive rally on Monday which propelled the KSE-100 index up by a jaw-dropping 1,312.68 points, representing a single day gain of 3.46 per cent.

As the investors watched in amazement, the benchmark knocked down two barriers of 38,000 and 39,000 to close at 39,296.30 after hitting intraday high by 1,379 points. Market value of shares surged by 208 billion.

After an awful February that saw the index erode all of the gains of 2020 with a loss of 3,647 points, throwing the year return in the negative by 6.8pc. The sell-off intensified in the final week of the month which witnessed the highest weekly rout of 2,266 points (5.6pc) in 20 months.

All of that had made a strong case for the market to rebound as stocks had receded to attractive levels. A strong comeback on the first trading day of March was underpinned by a string of positive news.

Recovery in regional markets, rebound in international oil prices, trade deficit numbers for February that went down by 20pc to $1.82bn and reduction in domestic petroleum rates in the range of Rs5-7 per litre for March improved investor sentiments. But the major trigger was the softer inflation for the outgoing month which clocked in at 12.40pc compared to 14.56pc in January, beating consensus expectations.

As CPI depicts further signs of easing and external imbalances continue to align further, evident by the 72pc decline in current account, in addition to rising reserve, economists were encouraged to believe in sustained level of growth. “The pressure to jump-start the relatively-choked economy may compel the State Bank to reduce rates as early as May’20,” an analyst said.

The only disconcerting factor was the continuous sell-off by foreigners in the sum of $2.45 million. During February, foreign portfolio outflow stood at a huge $50.2m, representing the highest monthly sale in 15 months. The liquidity was mopped up by mutual funds that bought stock worth $8.35m and insurance companies adding $2.96m worth shares to their portfolio.

Stocks that tossed the index upside included Engro Corporation, higher by 6.4pc, Oil abnd Gas Development Company 5.8pc, Pakistan Petroleum 5.3pc, Bank Al Habib 5.6pc, Lucky Cement 5.3pc and Hub Power 3.8pc. In cement, DG Khan rose 7pc, Maple Leaf 7pc, Cherat 7pc, Pioneer 7pc and Fauji 6.9pc all closed at their upper circuits as investors were encouraged by reports that government had lifted the ban on new construction in Gwadar.

From exploration and production, Pakistan Oilfields increased 3pc, Pakistan Petroleum 5.3pc and Oil and Gas Development Company 5.8pc closed in the green in line with upsurge in crude prices in the international market.

Published in Dawn, March 3rd, 2020