KARACHI: The market direction on Monday was set by the investor reaction to 100bps hike in policy rate by the State Bank for the next two months to 8.5 per cent on Saturday, which turned out to be at the upper end of the analysts’ expectations.

The KSE-100 index succumbed to the selling pressure from both local and foreign investors, closing with a loss of 69.15 points (0.17pc) at 40,929.44.

The market opened negative and the index sank to intraday low by 289 points. Barring banks, most sectors took the blow, mainly those regarded as highly leveraged. Cement, engineering and oil marketing companies collectively shed 50 points.

Cherry-picking at attractive valuations enabled index to emerge from the red for a brief period in the second half and made intraday gains of 30 points. The volume plunged 27pc to 106 million shares while the value traded declined 46pc to Rs3.47 billion. Bank of Punjab, Unity Foods, Pak Elektron and Engro Polymer and Chemicals were the leaders.

In cement sector, Lucky Cement fell 1.12pc and DG Khan Cement 1.75pc. On the oil and gas exploration and production sector, Pakistan Oilfields and Oil and Gas Development Company closed in red. Among banks, Habib Bank gained while MCB and United Bank declined. Lack of investor excitement in banking represented that the rate rise had already been priced in in the previous session on anticipation.

Major laggards were Hub Power, down 1.25pc, Lucky Cement 1.12pc, OGDC 0.69pc, Colgate-Palmolive Pakistan 4.16pc and Kohinoor Textile Mills 4.41pc, taking away 70 points. On the flip side, Pakistan Tobacco, up 2.90pc, Pakistan Petroleum 0.78pc and Meezan Bank 2.60pc added 48 points.

Published in Dawn, October 2nd, 2018