KARACHI: A pre-budget rally was witnessed on Wednesday where the bulls tossed the KSE-100 index up by 261.48 points (0.75 per cent) to close at 35,065.08.

Investors’ expectations of a market-friendly budget pushed the index higher for the third consecutive day. Stocks headed north in the lead of banking shares which recovered the losses they had seen in the sessions prior to the announcement of the May inflation numbers when the market had expected further policy rate cut. The three big banks — Habib, United and MCB — made major positive contributions.

Pharmaceutical sector was also a strong performer with most stocks closing in deep green. Investors accumulated stocks of pharma companies that they speculated might be ahead in the race to come up with a COVID-19 vaccine. Moreover, the sharp rise in demand of medicines in the face of pandemic was believed to help pharma companies fatten their bottom lines going forward.

Automobile stocks continued to be accumulated by deep-pocket individuals and institutions on a positive budget outlook for the industry. As the international oil prices remained under pressure, buyers’ enthusiasm on the ex-ploration and production shares waned.

While foreign selling slowed down to $0.5 million, banks, mutual funds and individuals did much of the buying that carried the index higher. The volume declined 9pc over the previous day to 218.7mn shares with traded value also down 13pc to reach $48.4m. Activity was witnessed mainly in the second- and third-tier stocks, manifest also in the fact that despite nearly one percent rise in index, market capitalisation showed a relatively smaller increase of Rs37m.

Sectors contributing to the index performance included banks, higher by 273 points, pharma 24 points and textiles 17 points. The biggest worry on the minds of investors was the rapid rise in coronavirus cases, which traders said prevented many from ploughing cash in shares.

Published in Dawn, June 11th, 2020