KARACHI: The surprise policy rate cut of 100 basis points by the State Bank of Pakistan on Thursday evening was greeted warmly by the stock market which opened in the positive on Friday.
The KSE-100 index climbed to intraday high by 319 points in the first few minutes on brisk trading in around four million shares and finally closed with gains of 229.86 points (0.68 per cent) at 33,939.49. Cyclicals (cement and steel), which are saddled with high debts, were largely the beneficiaries of the rate cut. Maple Leaf and DG Khan ame under heavy buying and so did Kohat, Pioneer and other leveraged stocks in the cement sector.
Foreigners sold shares worth $1.22m as fund managers globally were shifting out of the risky assets. Broker proprietary trading offloaded stocks of $6.66m and individuals also reduced portfolio on the last day of the rollover week. Banks made major purchases of scrips valued at $7.22m which was thought to be ‘’window dressing’’ at the year end on June 30.
In the exploration and production sector, Pakistan Oilfields rose 1pc while other major scrips remained muted regardless of the extending gains in international crude prices on optimism about a recovery in global demand as economies were opening up.
Banking stocks, on the other hand, declined further as a result of policy rate cut, with Habib and United closing in the negative. Traders noted activity in textile composite scrips with Gadoon up 3pc and Nishat Mills 0.2pc as the federal government had released an amount of Rs6.2 billion to the sector in cash subsidies under the PM’s Export Enhancement Package.
On the flip side, foreign exchange reserves held by the SBP decreased by $145.9m to $9.961 billion during the weekTotal volume increased 17pc over the previous day to 198.2m shares while traded value also rose by 28pc to reach $40.5m. Major contribution to the index came from Fauji Fertiliser, Engro Corporation and Hub Power as they cumulatively contributed 137 points to the index. Other bullish blue chips were MCB, edging higher by 0.5pc Lucky Cement 2.4pc and Pakistan Oilfields 1pc.
Published in Dawn, June 27th, 2020