KARACHI, Nov 11: Stocks on Tuesday responded bullishly to the State Bank amendment to the Prudential Regulations, allowing banks and DFIs to comply with their exposure limits in shares within the next two years instead of early next year as announced earlier.
The relief package triggered fresh institutional buying across-the-board at the current lower levels and put the market back on the rails just in one go. Banks’ shares, being the chief beneficiary of rise sharply higher under the lead of Bank Al-Habib, Askari Bank, Bank of Punjab and Faysal Bank, up Rs1.75 to Rs3.
The market’s positive response to the relief package may well be had from the fact that the KSE 100-share index recovered 49.40 points and breached through the psychological barrier of 3,800 at 3,818.47 points as compared to 3,769.07 at which level it was almost static for the last couple of sessions.
Market capital also recovered Rs12.955bn at Rs815.452bn, reflecting good gains in most of the pivotals, notably PSO and other energy shares.
“The market is expected to regain its past glory in due course after the central bank announced the relief package as big market players, including banks and DFIs, now have enough time to comply with exposure limits,” says a leading analyst. “More important thing is that fears of massive bank unloadings have been allayed but rather new portfolio-building may be around.”
Under the amended Prudential Regulations, banks have been allowed to comply with their exposure limits within two years instead of Dec 31, 2003, while development finance institutions (DFIs) have been allowed some exemptions on their investment in shares.
The market has been under pressure since last week when the State Bank announced new prudential rules, asking banks to tailor their investment in share business to 20 per cent for their equities by the end of the current year, which in turn, triggered sell-stops from some leading banks.
What is more important is that shares of the public sector companies, billed as one of the most liquid shares, including PTCL, PSO, Sui Northern and Sui Southern, National Bank, National and Pakistan Refineries will not be counted in 20 per cent ceiling of the equity and will provide a lot of manoeuvring leverage for banks, DFIs and some other big investors, brokers said.
The relief package, which is termed as a central bank gift to the bourse, came after a high-powered delegation led by the KSE president met the central bank governor on Monday and appraised him of the implications of the new rules and sought relief, which came instantly.
“The amendment came at a time when investors were in the process of applying for one of the largest IPO of OGDC issue, which in turn is expected to make it more attractive both for general investors and financial institutions,” analysts said.
Plus signs dominated the list after several lean sessions. Packages, Pakistan Services, HinoPak Motors, Ferozsons Lab, PSO, Clariant Pakistan, Pakistan Oilfields and Javed Omer being leading among the gainers, up Rs3 to Rs8.40. There were several other good gainers also.
Losers were led by Unilever Pakistan, off Rs27.90, followed by Treet Corporation, lower Rs13, while Lawrencepur Woollen, Mehmood Textiles, Honda Atlas, Century Papers, Gatron Industries, Bhanero Textiles and Pakistan Cables suffered fall ranging from Rs2.75 to Rs4.55.
Trading volume soared to 124m shares from the previous 88m shares but was far below the mounting orders as bears anticipating further rise in prices were not inclined to sell. The advancing shares held strong lead over the losing ones at 186 to 86, with 23 shares holding on to the last levels.
Hub-Power topped the list of actives, up 55 paisa at Rs34.75 on 13m shares followed by PSO, higher by Rs5.85 at Rs250.75 also on 13m shares, PTCL, firm by 15 paisa at Rs32.30 on 11m shares, FFC-Jordan Fertilizer, up 30 paisa at Rs18 also on 11m shares and D.G. Khan Cement, higher 95 paisa at Rs39.00 on 10m shares.
Other actives were led by TRG Pakistan, up 50 paisa at Rs17.60 on 10m shares, PTCL, up Rs1.5 on 7m shares, MCB, higher by Rs1.05 on 6m shares, Pakistan Oilfields, up Rs7.75 on 5m shares, and National Bank, higher by 85 paisa on 4m shares.
FORWARD COUNTER: PSO also came in for active short-covering and rose by Rs6.15 at Rs251.15 on 9m shares followed by Hub-Power, higher by 60 paisa at Rs34.80 on 6m shares, FFC-Jordan Fertilizer, firm by 30 paisa at Rs18 on 6m shares, PTCL, higher 30 paisa at Rs32.40 on 3m shares and ICI Pakistan up Rs1.95 at Rs74.10 on 0.553m shares.
DEFAULTER COMPANIES: Standard Bank attracted good support and rose by 20 paisa at Rs6.10 on 69,000 shares. Others also rose fractionally in sympathy with the ready section but turnover was light.