The Pakistan Stock Exchange on Tuesday managed to post healthy gains, fuelled by late session buying despite fears of another interest rate hike haunting the market throughout the day.
Investor speculation and concerns about the rate hike turned out to be true, as the central bank announced an increase of 100 basis points in the policy rate to 9.75% after the close of market.
The benchmark KSE-100 index snapped its four-day bearish streak and posted a gain of 370 points owing mainly to recent reports depicting some improvement in economic indicators.
Handsome growth figures of auto sales in November coupled with year-on-year growth in remittances instilled optimism among market participants, who opted to cherry-pick stocks that had fallen to attractive valuations during the recent bearish spell.
Earlier, the trading began on a positive note, but pessimist investors soon pulled the index down on fears of policy rate hike.
Throughout the day, the index oscillated in a narrow range. However, a buying spree emerging towards the end pushed the index above the 43,000-point level.
At close, the benchmark KSE-100 index recorded an increase of 370.34 points, or 0.86%, to settle at 43,246.71.
A report of Arif Habib Limited stated that mounting inflation and expectations of a hawkish stance in the monetary policy statement caused the market to open on a bleak note.
Cherry-picking was observed throughout the day as low price-to-earnings (P/E) multiples and high dividend-yielding stocks attracted value hunters.
The market continued to trade sideways as it witnessed hefty volumes in third-tier stocks. On the flip side, institutional activity remained lacklustre, the report said.
In the last trading hour, short sellers jumped in to square off their positions, which took the market into the green zone.
Sectors contributing to the performance included cement (+93 points), technology and communication (+91 points), refinery (+28 points), textile (+25 points) and engineering (+22 points).
JS Global analyst Muhammad Mubashir said that positive activity was witnessed at the bourse as the KSE-100 index closed at 43,247, gaining 370 points.
Healthy participation was witnessed in technology stocks mainly TRG Pakistan (+7.5%), NetSol Technologies (+7.5%), Avanceon Limited (+6.9%) and Telecard (+4.6%).
Major contribution to the traded volume of 212 million shares came from WorldCall Telecom (+5.9%), Byco Petroleum (+6%), TPL Properties (+4.3%), Telecard (+4.6%) and TRG Pakistan (+7.5%).
“Going forward, we expect range-bound activity to continue due to concerns over the economic outlook and geopolitical situation,” the analyst said.
“We recommend investors to avail any downside as an opportunity to buy in banking and exploration and production sectors.”
Overall trading volumes increased to 212.4 million shares compared with Monday’s tally of 150.4 million. The value of shares traded during the day was Rs6.8 billion.
Shares of 323 companies were traded. At the end of the day, 237 stocks closed higher, 67 declined and 19 remained unchanged.
WorldCall Telecom was the volume leader with 21.1 million shares, gaining Rs0.1 to close at Rs1.8. It was followed by Byco Petroleum with 16.1 million shares, gaining Rs0.34 to close at Rs5.99 and TPL Properties with 12.8 million shares, gaining Rs1.26 to close at Rs30.64.
Foreign institutional investors were net sellers of Rs394.22 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.