WEEKLY REVIEW: Rate cut hopes thrust KSE 261.35 points up

KARACHI: Bullish sentiments continued to dominate the trading sessions at the Karachi stock market during the week on support from intense buying activities witnessed as expectations loomed of discount rate cut after T-bill cut-off yields fell between 156bps to 78bps, analysts said on Saturday.

The State Bank of Pakistan’s auction and the Karachi Stock Exchange’s (KSE) board of directors move to launch deliverable future contracts next month was taken positively by retail and institutional investors.

The KSE 100-share index gained 261.35 points or 3.5 percent to close at 7,764.01 points as compared to 7,502.66 points of the previous week.

Analysts said that rise in international oil prices, recovery in global capital markets and foreign investment were the major reasons for the positive closure of the market.

The turnover was recorded at 183.81 million shares as compared with 124.54 million shares of the previous week, reflecting a decrease of 47.59 percent.

“The much-awaited demand for a leveraged product by investors was finally over as the board of KSE approved the proposal to re-launch the deliverable futures contract on 10 eligible scrips,” said analyst at JS Research Bilal Qamar. “Apart from this, news regarding the monetary policy announcement on July 25 kept encouraged investors to take positions.”

Foreigners continued to remain the top buyers at the market for the fifth consecutive week with net buying of 3.5 million shares.

After a break of nearly four months, the board of KSE finally approved the re-launch of deliverable futures contract for 10 blue scrips namely POL, OGDC, PPL, PSO, HUBCO, FFC, ENGRO, MCB, NBP and UBL. The entities have a combined weight of 49 percent in the overall market capitalization. As a result the volumes are expected to improve further, he added.

The SBP will be announcing the monetary policy for the 1QFY10 on July 25, in which the investors expect a cut in the interest rate. Analysts believed that the SBP would lower interest rates by 150bps on the basis of declining CPI inflation, which stood at 13.1 percent in June. link.....