Stocks inch up on likely rate hike in view of inflationary pressures

Stocks moved up on Monday, continuing the positive momentum of the last two sessions, as commercial banks performed well on expected rate hike in view of high consumer price index (CPI) numbers, dealers said.

Madiha Javed, head of research at Ismail Iqbal Securities said inflation for February came in at 8.2 percent YoY with core inflation of 8.8 percent. This makes the case for higher interest rates in the economy.

“Bank of Punjab was the most actively traded stock with over half the market volumes given its result announcement for the year. Partial settlement of receivables for the power sector companies as part of the circular debt was also positive,” she added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 0.53 percent or 210.73 points to close at 39,749.75 points level. KSE-30 shares index followed suit with a high of 0.42 percent or 79.00 points to end at 19,101.02 points level.

Of 348 active scrips, 206 moved up, 117 retreated, and 25 remained unchanged. The ready market volumes stood at 168.446 billion shares, as compared with the turnover of 137.196 billion shares in the previous session.

Maaz Mulla from JS Group said, “On the news front, Pakistan is expected to reach an agreement with the IMF on a potential bailout package worth $12 billion.”

Moreover, CPI rose 8.21 percent in February 2019, compared to 7.19 percent last month. Commercial banks closed higher than previous day close, where big banks boosted the index by 74 points, he added.

According to an analyst, the concerns over India-Pakistan confrontation were apparently put to rest by the investors, and participation in stock market was also picking pace.

In view of the high monthly SPI, Topline Securities in its report said a central-bank rate hike seemed more likely to the market participants. “Resultantly, commercial banks were the best performers, adding 77 points to the index. While on the other hand E&P’s dragged the index down, due to a fall in international oil prices, chipping away 27 points,” it added.

Shares in the auto sector climbed sharply in the range of Rs2.37 to Rs18.37. Stocks that contributed significantly to the index, included Habib Bank (54 points), United Bank (28 points), BOP (24 points), Pakistan State Oil (21 points), and Engro Fertilizer (18 points).

Stocks were negative included Pakistan Petroleum Limited (26 points), MCB (18 points), SEARL (14 points), Habib Metropolitan Bank (seven points), and Mari Petroleum (seven points).

The highest gainers were Sanofi-Aventis, up Rs39.90 to close at Rs837.90 /share, and Wyeth Pakistan Limited, up Rs37.17 to finish at Rs1,083.25/share. Companies that booked highest losses were Mari Petroleum, down Rs13.83 to close at Rs1,319.67/share, and Gatron Industries, down Rs13.69 to close at Rs304.56/share.

BOP recorded the highest volumes with a turnover of 90.959 billion shares. The bank’s scrip gained Re1 to close at Rs13.79/share. The lowest volumes were witnessed in Oil and Gas Development Company recording a turnover of 1.799 million shares, whereas the scrip lost Rs0.21 to end at Rs153.04/share.