Index rally slows as interest rate cut batters banks
KARACHI: The unexpected policy rate cut by 25 basis points by the State Bank of Pakistan took its toll on the banking sector stocks on Monday.
Soon after the opening bell, investors rushed to reduce their banking portfolio, which had a domino effect on other sector stocks. All of that sent the KSE-100 index reeling down to intraday low by 265 points.
Average daily volumes declined by 33 to 266 million shares, from 395 shares traded the previous Friday while the average traded value decreased 7 per cent to Rs10.7bn, from Rs11.6bn, as focus shifted towards future roll over. Foreign investors sold stocks worth $4.5m, taking the year-to-date outflow at $121.65m.
The index bounced back in later part of the session as bargain hunters stepped in to make quick gains. Among the local participants, individuals were the major buyers of net $3.25m worth shares on Monday. HUBC rose 2.9pc, FFC 1.48pc and KAPCO 2.95pc garnered investors’ attention. Several leveraged stocks, such as ENGRO up 1.83pc and EFERT 1.69pc, also rallied as investors expect reduced financial charges on the back of rate cut.