Stocks rise 366 points ahead of key policy rate announcement

KARACHI: Stocks closed higher on Thursday with a rally in cement stocks ahead of the monetary policy statement regarding a cut in the key policy rate, which was reduced by 200 basis points to 17.5 per cent, higher than the market expectations.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 share index closed higher by 365.82 points or 0.47 per cent to 79,017.62 points against 78,651.8 points recorded in the last session. The highest index of the day remained at 79,217.62 points while the lowest level was recorded at 78,577.65 points.

Analyst Ahsan Mehanti at Arif Habib Corp said, “Stocks closed bullish amid speculations over the SBP’s key policy rate announcement.”He said a strong rupee, falling inflation, upbeat data on remittances and exports, and an expected resolve over the external financing gap for the new IMF loan program played a catalyst role in the bullish close.

The KSE-30 index increased by 95.72 points or 0.39 per cent to 24,912.63 points against 24,816.91 points.Traded shares rose by 52 million shares to 584.276 million shares from 532.732 million shares. The trading value increased to Rs16.364 billion from Rs14.735 billion. Market capital expanded to Rs10.506 trillion against Rs10.47 trillion. Of the 439 companies active in the session, 212 closed in green, 167 in red and 60 remained unchanged.

Maaz Mulla, an analyst at Topline Securities, said that in contrast to Wednesday’s trend, equities opened on a bullish note ahead of the key monetary policy meeting, which was scheduled for announcement later in the evening. The KSE-100 index sustained positive momentum throughout the session, closing at 79,017 points, marking a gain of 365.82 points (up 0.47 per cent).

He said that broad-based buying was observed in blue-chip stocks, driven by widespread market expectations of a 100-150bps reduction in interest rates, backed by declining inflation and improved macroeconomic indicators.

Key heavyweights such as UBL, FFC, FCCL, OGDC, and HUBC posted significant gains, collectively contributing to a notable 236-point rise.Investor sentiment remained particularly strong in the cement sector, with heightened expectations surrounding the upcoming monetary policy decision, where a rate cut was widely anticipated.

Cement stocks like FCCL (up 4.77 per cent), MLCF (up 4.45 per cent), DGKC (up 2.2 per cent), and CHCC (up 2.14 per cent) all closed higher compared to the previous day.

The highest increase was recorded in Pakistan Tobacco Company Limited, which rose by Rs49.07 to Rs918.78 per share, followed by Unilever Pakistan Foods Limited, which increased by Rs48 to Rs17,440 per share.

A significant decline was noted in Mari Petroleum Company Limited, which fell by Rs83.34 to Rs3,502.86 per share; Pakistan Engineering Company Limited followed it, which closed lower by Rs37.77 to Rs872 per share.

Brokerage Arif Habib Ltd stated that the KSE-100 staged an impressive recovery on Thursday, driven primarily by cement stocks, pushing the index back above the 79k level.

In a surprise move after the market closed, the State Bank of Pakistan (SBP) announced a 200bps cut in the policy rate, exceeding expectations of a 150bps reduction. This larger-than-expected cut is expected to trigger a strong gap up on Friday, with a potential move towards 80k, led by continued strength in cement stocks.

Kohinoor Spinning remained the volume leader with 60.745 million shares which closed lower by 85 paisas to Rs8.87 per share. WorldCall Telecom followed it with 57.978 million shares, which closed lower by 7 paisas to Rs1.43 per share.

Other significant turnover stocks included TPL Properties, TPL Corp Ltd, Agritech Limited, Waves Home App, Aisha Steel Mill, Fauji Cement, Pak Elektron and Symmetry Group Ltd.In the futures market, 318 companies recorded trading, of which 180 increased, 130 decreased and 8 remained unchanged.