KARACHI, Aug 13: The decision of the State Bank of Pakistan to go for a higher than expected policy rate cut, helped Karachi stock market to make a storming start of a shortened week on Monday.
The KSE-100 index surged by 150.48 points or slightly over one per cent to settle at 14,911.97 points.
Most market participants said that the fact that Central Bank had chopped policy rates was scarcely surprising for the market; but the quantum of cut was subject of debate. The SBP had reduced rate by 1.50 per cent to 10.5 per cent, from 12 per cent.
It was the first Monetary Policy Statement (MPS) of SBP for FY13 and the first rate cut since October 2011. The market, however, benefited on a deeper cut and excepting the beleaguered banking sector, most other sector drew investors' interest, which was manifest by the turnover which rose more than five times over the volume last Friday.
The highly leveraged cement, fertiliser and textile sector companies benefited and so did the yield plays. However, banks were the chief victims.
Among local participants, companies bought stocks valued at $2.73 million. Foreign investors, who have been relentless buyers, purchased equity of net worth $0.88 million on Monday.
More than the run of the bull that tossed the KSE-100 index close to 15,000 level intra-day on Monday, the traders and brokers were jubilant over the escalation in volume, which surged to 195 million shares on Monday, from 38 million shares last Friday.
Trading value shot up to Rs6.727 billion, from Rs1.524 billion. Market capitalisation stood at Rs3.805 trillion, by the addition of Rs38 billion in Friday's capitalisation at Rs3.767 trillion.
Mohammad Sohail, CEO at Topline Securities, pointed out that the market capital had crossed $40-billion-mark after higher than anticipated rate cut by the SBP. High debt firms and dividend yielding stocks rallied. “Breaching 15,000-level (on closing basis) will be a major milestone for the market,” he said.
Market participants said that the rally was helped by hefty payouts by Pakistan Petroleum, which announced earning per share at Rs31.13 for the FY12 and the board recommended cash dividend at Rs6.50, along with bonus shares at 25 per cent.
The share in PPL jumped by Rs10.25 which was followed by another heavyweight oil and gas stock, POL which shot up by Rs19.51 and the Attock Petroleum which rose by Rs10.18.
Ahsan Mehanti at Arif Habib Corp commented that investors took positions in leveraged stocks on expectations of strong earnings outlook.
Hopes for fall in CPI inflation for August played a catalyst role in bullish sentiments despite concerns for pending decision of Supreme Court on NRO implementation cases.
The KSE-30 index jumped 173.49 points or 1.37 per cent to 12,860.01 points.
In all, 298 stocks came up for trading on Monday with 187 gainers and 91 losers. The highest rise was noted in Colgate Palmolive, which was up by Rs45.57 to Rs1,359, followed by Bata (Pak) which gained Rs34 to Rs750.
The heaviest fall was seen in Unilever Food, down by Rs75 to Rs2,750, followed by Indus Motor Company which lost Rs6.26 to Rs260.75.
KESC was on top of the 10 volume leaders. It saw business in 20m shares, up by maximum Re1 to Rs5.27. D.G. Khan Cement gained Rs2.04 to Rs49.17 on 18m shares, Bank Alfalah slid by 61 paisa to Rs16.99 on 15m shares, Fauji Cement added 21 paisa to Rs6.20 on 13m shares and Maple Leaf Cement was up by 25 paisa to Rs7.79 on 10m shares.
Azgard Nine firmed up by 71 paisa to Rs6.51 on 9m shares, Jah Sidd Co moved higher by 55 paisa to Rs15.54 on 9m shares, Nihsat Mills rallied by Rs2.60 to Rs56.01 on 8m shares, Lafarge Pakistan edged higher by 5 paisa to Rs4.65 on 7m shares and Askari Bank declined by 22 paisa to Rs14.55 on 6m shares.