Stocks soar 476 points on rate cut expectations
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KARACHI: The stock market snapped two-day losing streak as the bulls barged on Thursday and tossed the benchmark KSE-100 index to close with hefty gains of 475.71 points (1.22 per cent) at 39,382.11.
The frenzied buying across the board sent the index up by 836 points in early trade. Profit-taking in the last hour saw it concede a major portion of the day’s gains.
PSX tracked the recovery in regional and international market. Other issues that sent positive signals to equity traders were the decline in yields in the range of 15-46 basis points in the Pakistan Investment Bond auction conducted by the State Bank on Wednesday, which was thought to provide stimulus for flow of funds to the exchange.
Intermarket Securities commented: “This has led to sudden increase in expectation of policy rate cut in the upcoming monetary policy amid likely deceleration in inflation, primarily due to high base effect, delay in utility rate adjustments and price normalisation in certain food categories.”
Moreover, investors were encouraged by indication of relaxation in fiscal targets, rising remittances, increasing foreign exchange reserves and narrowing trade deficit.
The volume surged by 82pc to 341 million shares over the previous day, while value traded jumped 80pc to $86m. Fauji Cement was the leader with 30m shares traded, followed by contributions from Unity Foods and Pakistan International Bulk Terminal.
Scrip-wise, lead gainers were Lucky Cement, up 6.2pc, Engro Corporation 3.4pc, Hub Power 2.9pc, MCB 1.8pc, Pakistan Petroleum 2.6pc, Fauji Fertiliser 2.4pc and Pakistan State Oil 3pc.
Cement stocks were high in demand due to increased despatches recorded in February, anticipation of decrease in financial charges going forward on possible interest rate cut and reports of heavy utilisation of Public Sector Development Programme funds. Kohat rose 7pc, Cherat 6.9pc, Pioneer 7pc, Fauji 6.7pc, Maple Leaf 6pc, DG Khan 5.6pc and Lucky 6.2pc all ended at their upper or close to the upper circuits.
Published in Dawn, March 6th, 2020
