KARACHI: True to expectations, the stock market celebrated the cut in the State Bank’s key policy rate by 100 basis points, as shares took a flight to the north on Monday. The KSE-100 index surged by 439.94 points or 1.29 per cent to close at the new all-time high at 34,466.53 points.

Although the heavyweight oil and gas sector remained mixed on uncertainty over the prospective international oil prices, leveraged stocks in cements, textiles and fertilisers converged to push the index to uncharted territory.

On the oil and gas sector, the two worthwhile gainers were Mari and PSO.

While local participants traded both ways with ‘companies’ and ‘individuals’ taking profit through sales of equity worth $7.50 million and $6.34m, banks bought stocks of net worth $3.05m and mutual funds picked up fresh equities worth $6.51m.

Foreigners were one the major investors on Monday, with net purchases of $7.81m, which pulled the month/year-to-date trend from net sales to reflect net purchases of $7.28m.

Foreign fund managers on Monday shifted portfolio from oil and gas sector which saw net outflow of $1m, to inflows in the huge sum of $6.5m in the chemicals (apparently in the Engro entities) and $2.2m in cements.

Research section at brokerage Taurus Securities observed that the policy rate cut by 100bps was warmly welcomed by the market “as expectations were mostly pegged at a series of 50bps cut to cumulative 150bps by June 2015, though a small minority was hinting at 100bps”. In the face of falling returns on fixed income investments, investors are flocking to the stock market.

Trading in terms of volume scaled 59pc to 362m shares on Monday and trading value rose 50pc to Rs20.6bn, from Rs13.6bn last Friday.

Published in Dawn January 27th, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play