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November 1, 2019

Index gains 1.31pc on hopes of cut in benchmark interest rate


November 1, 2019

The capital market recorded 1.31 percent gains on Thursday amid hopes for a cut in the benchmark interest rates around the corner following sharp decline in cut-off yields in long-term government securities from 90 basis points to 115 basis points, dealers said.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Stocks closed bullish led by scrips across the board on easing political noise amid government resolve to approve political protests.”

Positive outcome of the Pakistan Energy Sukuk, Stronger rupee parity, higher global crude oil prices and government’s renewed commitments on Financial Action Task force (FATF) International Co-operation Review Group (ICRG) action plan implementation played a catalytic role in the bullish close, he added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 1.31 percent or 442.27 points to close at 34,203.68 points level. KSE-30 shares index followed suit with a high of 1.18 percent or 185.26 points to end at 15,937.71 points level.

Of 355 active scrips, 235 moved up, 101 retreated, and 19 remained unchanged. The ready market volumes stood at 183.976 million shares, as compared with the turnover of 129.961 million shares in the previous session.

Faisal Shaji, strategist at Standard Capital, said the KSE-100 continued to be in the green, given improved macroeconomic outlook and persistent fall in bond yields.

“Now, interest rate cut could be on the cards in the foreseeable future. Government continued to take lenient view on tax collection drive and hence we may see confidence would be back in 2020,” he added.

Contrary to previous two sessions, the cement sector showed signs of recovery with improved sales. Market outlook was positive, and the sit-in in Islamabad by the opposition parties became a nonissue.

Salman Ahmad, head of institutional sales at Aba Ali Habib, said two positive developments helped boost sentiments. Pakistan Investment Bonds yields went up one percent and the government amicably resolved the taxation issue with traders, ending the two-day strike.

Moreover, he said temperature that was rising over the “Azadi March” had cooled after the government allowed the opposition to hold public meeting.

In the coming weeks, with some good news on the political and economic front, the market was likely to stage a good rally, some dealers said. A leading analyst said that inflation numbers would be released on Friday; if the figures reach around 10 percent it would further create room for monetary easing.

By the end of November, when the State Bank of Pakistan would announce policy rates, market men expect a rate cut with rupee on a stable path. The highest gainers were Colgate Palmolive, up Rs87.58 close at Rs1,887.58/share, and Bata Pakistan, up Rs45.00 to finish at Rs1,500.00/share.

Companies that booked highest losses were Nestle Pakistan, down Rs245.00 to close at Rs6,400.00/share, and Pakistan Tobacco, down Rs118.18 to close at Rs2,282.02/share. WorldCall Telecom recorded the highest volumes with a turnover of 24.256 billion shares. The scrip gained Re0.02 end at Rs1.22/share.

The lowest volumes were witnessed in International Steels Limited, recording a turnover of 3.976 million shares, whereas the scrip gained Re1 to end at Rs44.39/share.

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