The equity market on Friday kept its northward journey to peak beyond the historic high of 16,000 points, thanks to declining inflation that deepened the investors’ hope for further monetary easing by the central bank in its next monetary policy decision due early next month.
Last trading session of the week saw the KSE 100-share index witnessing what the market observers said the highest ever close amid other positives like higher trades and market capitalization.
“KSE 100 witnessed highest ever close amid higher trades after CPI inflation for October 2012 stood at 7.66pc raising expectations for rate-cut by (the) SBP in policy announcement,” viewed Ahsan Mehanti, a senior stocks market analyst.
According to unofficial figures, the Consumer Price Index inflation for the month of October was recorded as low as 1.13 percent at 7.66 percent compared to 8.79 percent noted in the preceding month of September.
With market observers attributing this decrease to declining food prices, the average inflation for the first four months of FY13 stood at 8.8 percent compared to 11.3 percent of the corresponding months in FY12. “We believe the major reason behind the decline is fall in food head,” opined Topline analyst Nauman Khan.
This southward movement of the backbreaking price hike puts more weight behind the analysts’ view that the central bank in its next monetary policy statement in early December is like to slash the discount rate at least by 50 and at maximum by 100 basis points.Pinning hope in such forecasts the investors at Karachi stocks market made Friday a historic day in the history of country’s equity market where the benchmark KSE 100 index closed at all time high of 16,101.55 points, gaining 139.18 points over Thursday which saw the index hitting a record 15,962.37 points. The intraday high and low, respectively, stood at 16,107.38 and 15,962.37 points. On Thursday, the index was recorded at record intraday high of 16,005 points.
Friday saw the trading turnover recorded at the ready counter higher at 191.494 million shares. This was against 189.190 million shares of the previous trading session. Trading value also remained in the green zone increasing to Rs 5.18 billion from Rs 4.72 billion a day earlier.
The market capitalization was seen swelling beyond Rs 4 trillion as against Thursday’s Rs 3.98 trillion. The free-float KSE-30 index also gained 133 points to close at 13,209.25 points against the previous 13,076.04 points.
Fauji Cement appeared as a volume leader by getting its 49.093 million stakes traded at a price opening from Rs 6.44 and closing at Rs 6.94. Of the total 351 scrips traded, 182 companies could end up in positive range, 145 in negative and 24 remained unchanged. The future contracts sold were recorded at 10.80 million against Thursday’s 9.51 million.
Besides the investors’ hope for another discount rate-cut, higher global stocks and commodities and renewed foreign interest in oil stocks on strong valuations played a catalyst role in Friday’s bullish sentiments, said Mehanti, who serves as a director at Arif Habib Securities. This, the analyst said, was despite the investors’ concern for negatives like falling rupee-dollar parity ahead of repayments of the IMF loans due this month and higher import bills, security issues in the city and political crises in Balochistan province. “Primary reason for such improved performance from equities has been cut in the policy rate by the central bank in first week of Oct-12,” commented Mazhar A. Sabir, an analyst at InvestCap Research.
