Rate cut lifts KSE

The Karachi share market got a boost Monday as the growth-conscious central bank cut the cost of bank borrowings by one percent to a 'historic' 42-year low of seven percent Saturday. However, a sharp decline in the index heavyweight banking stocks made the day's rally marginal. The KSE-100 index rose by 102 points or 0.31 percent to close at 32,707.22 compared to 32,605.62 of Friday last.
The leveraged stocks in cement, auto, fertiliser and textile sectors led the rally as the benchmark index moved both ways to hit 32,872.20 (high) and 32,478.14 (low) in intraday trading. The trading turnover recovered from the months-low level of 75.46 million to 179.13 million shares which is above month-to-date average volumes of 164 million. The stocks traded also rose in value to Rs 10.55 billion from Rs 3.56 billion of last session. Overall, 332 issues changed hands of which 192 moved up, 127 moved down while 13 stayed unchanged.
With foreign portfolio investment ending negative at net selling of $0.910 million, the market capital accumulated up to Rs 7.099 trillion. Pak Elektron led the volume on the week's first trading day by counting its 27.25 million listed shares traded. The scrip opened the day with Rs 64 and rallied to Rs 65.17. Fauji Cement 15.4 million, Maple Leaf Cement 12 million, Bank of Punjab 8.4 million, K-Electric 6.0 million, Byco Petroleum 5.8 million, Bank Al-Falah 5.6 million, PTCL 5.5 million, Engro Fertiliser 5.3 million and D.G Khan Cement 5.0 million were other top performers.
The futures trade also moved upward at 56.55 million contracts against the previous 7.23 million. "An above-expectation cut of one percent in interest rate brought renewed interest across-the-board," viewed Samar Iqbal of Topline Securities. The leveraged companies including MLCF, FCCL, and PAEL rallied on expectations that the rate cut would reflect positively on their borrowing cost. The auto assemblers witnessed renewed interest amid depreciating yen against the dollar as it favours auto assemblers, said Samar.
The major losers were the banking stocks which Ahsan Mehanti of Arif Habib Corp said battered on above expected cut in the key policy rate. Most of the banking stocks ebbed to their five percent lower limit following rate cut. The State Bank also introduced a target rate of 6.5 percent which is expected to squeeze margins of the banking sector. MCB, UBL, BAHL, HBL, NBP, BAFL and ABL collectively weighed the index down by 300 points, said Samar. "Easing political uncertainty and strong earnings outlook amid expansion in private sector credit played a catalyst role in bullish activity," Mehanti observed.