Stocks remain on a roll as rate-cut outlook grows brighter

Stocks on Thursday remained on a roll , gaining almost 2 percent as a rate-cut-outlook-driven bull-run continues to gather momentum in an oversold market that saw an 86 percent jump in turnover over yesterday, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index hit a high of 1.91 percent or 591.78 points to close at 31,546.61 points, while KSE-30 rallied 2.16 percent or 314.95 points to end at 14,915.86 points.

As many as 360 scrips were active today. Out of that total 262 ended higher, 79 finished lowered, and 19 did not change. The turnover came out at 185.842 million shares against 99.661 million in the previous session.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “The central bank is strongly expected to adhere to a dovish stance in its monetary policy statement to be release on Monday”. “A rate cut will bolster the market; however, in case of a status quo, there is a possibility the market may react with a retreat.”

Ahmad said Securities and Exchange Commission of Pakistan’s efforts to for long-term solutions to the liquidity problems, also played a role in boosting sentiment.

Unverified reports that the government was mulling giving construction sector “industry status” and releasing funds for public sector development also proved well for the market perception, Ahmad added. Ahsan Mehanti at Arif Habib Corporations said, “Stocks closed bullish amid higher trades as investors weighed activity by state funds after decisions on status quo in NSS (National Savings Schemes) rates and a bull-run in global equities on trade optimism”. “Recovery in global crude oil prices, likely resolve for Gas Infrastructure Development Cess issue next week by Supreme Court and speculations on government resolve for privatisation of state-owned enterprises resulted in bullish close,” Mehanti added.

A leading analyst said the tone for a cut in the interest rate had been set following Wednesday’s treasury bills auction where participation in one-year securities clocked at Rs1.45 trillion and bids accepted stood around Rs450 billion, with cut-off yield trimmed by 31 basis points to 13.93 percent. “This and the declining trend witnessed in the secondary market in bond trading signal a review of benchmark interest rate was in the making,” he said. During the past three sessions, the apex bourse rose by 4.4 percent or 1,332 points. In Thursday’s session, the total trading value reached $51.88 million, hitting a high of 64 trading sessions, last seen on May 30, 2019. Traded volume also jumped 86 percent on day-on-day basis to 186 million shares.

Arif Habib Limited, a brokerage house, in their market analysis said, “The major reason for general positivity seems to be expectation of rate cut, which had an indication from recent auction of T-bills that saw yield curve sliding further. Market on close, however, saw attrition of around 350 points closing the index to 553 points (unadjusted). Oil and gas exploration and production stocks saw reversal in prices at the end of session”.

The highest gainers were Nestle Pakistan, up Rs130.36 close at Rs5,750/share, and Colgate Palmolive up Rs99.74 to finish at Rs2,094.73/share.

Top losers were Sapphire Fiber, down Rs40.13 to close at Rs762.62/share, and Murree Brewery, down Rs35.99 to close at Rs733/share.

WorldCall Telecom posted the highest turnover of 18.328 million shares, gaining Rs0.13 to end at Rs0.98/share, while Pakistan Petroleum scored the lowest volume at 4.973 million shares, but the scrip strengthened by Rs3.26 to end at Rs122.16/share.