Stocks end week with gain of 315 points as investors welcome 200bps cut in policy rate

KARACHI: Stocks closed higher on Friday, as investors welcomed a 200bps cut in the key policy rate, higher than the market expectations of 150bps. Besides, hopes for revival of the IMF programme also added fuel to the investor sentiment.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 share index closed higher by 315.44 points or 0.4 per cent to 79,333.06 points against 79,017.62 points recorded in the last session. The highest index of the day remained at 80,016.74 points while the lowest level was recorded at 79,262.72 points.

Analyst Ahsan Mehanti at Arif Habib Corp said, “Stocks closed bullish after the SBP slashed key policy rate by 200bps to 17.5 per cent amid falling inflation and IMF announcement for its executive board likely approval of the $7 billion new IMF loan program on Sept 25.”

He said the finance minister’s affirmation for resolve on all IMF issues, $2 billion external financing from friendly countries, a strong rupee and surging foreign exchange reserves played a catalyst in the bullish close.

The KSE-30 index increased by 114.44 points or 0.46 per cent to 25,027.08 points against 24,912.63 points.

Traded shares rose by 332 million shares to 916.053 million shares from 584.276 million shares. The trading value increased to Rs21.236 billion from Rs16.364 billion. Market capital expanded to Rs10.542 trillion against Rs10.506 trillion. Of the 438 companies active in the session, 184 closed in green, 211 in red and 43 remained unchanged.

Ali Najib, an analyst at Topline Securities, said a 200bps cut in interest rates (better than street expectation of 150bps) and Pakistan agenda on the IMF Board of Directors calendar were the two key catalysts for the bullish trend anticipated by investor community.

Initially, the PSX commenced the day as per expectation and made an intraday high at 80,017 level (gained 999 points; up 1.27 per cent) in the early trading hours. However, selling headwinds above 80k level pushed the benchmark index below 80k as KSE100 index called the day at 79,333 level (+315 points; up 0.4 per cent)

The highest increase was recorded in Unilever Pakistan Foods Limited, which rose by Rs102.5 to Rs17,542.50 per share, followed by Ismail Industries Limited, which increased by Rs93.97 to Rs1,700 per share. A significant decline was noted in Hoechst Pakistan Limited, which fell by Rs49 to Rs1,951 per share; Dynea Pakistan Limited followed it, which closed lower by Rs26.02 to Rs234.22 per share.

Analyst Mubashir Anis Naviwala at JS Research said bulls took charge as the market welcomed a rate cut and strong price performance was witnessed across the board.

“Looking ahead, we recommend investors adopt a buy-on-dips strategy, with a special focus on the cement, E&P, and technology sectors,” he said.

WorldCall Telecom remained the volume leader with 87.808 million shares which closed lower by 5 paisas to Rs1.38 per share. Pervez Ahmed Co followed it with 75.919 million shares, which closed higher by 68 paisas to Rs2.03 per share.

Other significant turnover stocks included Kohinoor Spinning, Ist Capital Sec, Pace (Pak) Ltd, Waves Home App, Secure Logistics Gro, TPL Corp Ltd and F Nat Equities.

In the futures market, 318 companies recorded trading, of which 115 increased, 201 decreased and 2 remained unchanged.