close
Friday March 29, 2024

Stocks maintain momentum betting on a likely rate cut

By Our Correspondent
October 12, 2019

Stocks on Friday continued to bask in the buzz that with government bonds’ cut-off rates going down, a slack in the monetary policy was around the corner, amid strong sentiments following central bank governor’s reassuring remarks, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Shares Index gained 1.32 percent or 447.99 points to close at 34,475.69 points, while, KSE-30 strengthened 1.72 percent (273.86 points) to end at 16,237.38 points.

Of 403 active scrips, 238 ended higher, 149 lower, and 16 remained inert. On Friday around 287.100 million shares changed hands as compared to 261.561 million shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Stock closed bullish in the earnings season on speculations ahead of corporate earnings announcements at the apex bourse”. Surging global equities and crude oil prices, expected expansion of CPEC (China-Pakistan Economic Corridor) projects, and upbeat data on remittances for September 2019 contributed to today’s bullish close, Mehanti added.

Analysts say the momentum on CPEC projects is slowing, in part due to concerns over the size of Pakistan’s debt and a struggling economy, which led Islamabad to turn to the International Monetary Fund for a $6 billion bailout package in July.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “As expected the market gained sharply closing over 34,000 points on Thursday, giving room for an increment of 400 to 500 points”.

The market at one stage was up by more than 600 points, but it shed weight owing to some weekend adjustments by the investors, Ahmad added.

Moreover, he said the FATF’s (Financial Action Task Force) decision on Pakistan’s status in a review meeting in Paris would set the direction of the market for the next week.

The global watchdog will review progress made by Pakistan on controlling terror financing and money laundering on October 13-14. Pakistan, included on a so-called gray list compiled by the FATF, has been under increasing pressure to stop the financing of militant groups.

Topline Securities in its weekly market review said, “Rising for the second consecutive week, the PSX gained 4.37 percent in the week”.

“From its recent bottom of 28,765 points seen on August 16, 2019, the benchmark KSE 100 index has gained 20 percent led by falling yields in the local currency bond market.”

The benchmark 10- year Pakistan Investment Bonds (PIBs) traded at 11.34 percent on Friday, down from 12.03 percent a week back. In last 2 months the PIBs yields have fallen by close to 250ppts.

A leading trader said that the market also drew strength from Governor State Bank Reza Baqir’s remarks that things had been moving in the right direction, current account deficit had been curtailed and inflation was likely to ease in the second half of 2020.

The highest gainers were Rafhan Maize, up Rs310 close at Rs6,510/share, and Unilever Foods Rs29.42 to finish at Rs6119.97/share. Companies that booked highest losses were Nestle Pakistan, down Rs155 to close at Rs5,365/share, and Gatron Industries down Rs23 to close at Rs437/share. Lotte Chemical recorded the highest volumes with 19.111 million shares and gained Rs0.06 to end at Rs16.07/share. Fauji Cement’s turnover was the lowest with 6.433 million traded shares; however, the scrip gained Rs0.1 to end at Rs14.94/share.