Discount rate hike halts market's upturn

KARACHI — A 0.05 per cent increase in the discount rates to 10 per cent from the previous 9.5 per cent halted the share market's upward drive yesterday as investors took profits on the perception that the borrowing cost will rise making production more expensive, analysts said.

By Our Correspondent

Published: Thu 2 Aug 2007, 8:57 AM

Last updated: Sat 4 Apr 2015, 9:19 PM

A leading analyst was, however, of the view that the hike may not prove a major depressant as far as the share business is concerned as it is largely operates under the CFS regime, which has its own rise and fall mechanism in the rates.

But reports that some of the leading companies have been permitted by India to export cement to the Indian companies neutralised the negative impact of interest hike on the share business at least for the near-term, they said.

Barring Lucky Cement, one of the leading exporters, which suffered sharp fall of Rs2.40 at Rs127.80 on below market expectations cash dividend for the last year, the other two beneficiaries came in for active support and ended higher.

This perception was also reinforced by the KSE 100-share index, which early after having risen by about 100 points on spillover of the overnight run-up,later finished with a decline of 49.97 points at 13,688.90 as compared to 13,738.87 a day earlier. The KSE 30-share index also fell by 109.65 points at 16,508.52.

While some of the leading base shares came in for active selling at the inflated levels under the lead of PTCL, Bank of Punjab and some others, secondliners mostly in the cement sector finished with fresh good gains.

"The market is in the process of consolidation phase in anticipation of higher dividend and could attain its index level of 14,000 points shortly after the confusion created by 'deal or no deal', fades out," said a leading broker.

Some of the foreign investors are back in the market and are expected to enhance their daily share intake on selected counters, which in turn will generate sympathetic buying on the other counters, he added.

Leading gainers were led by JS & Co and EFU Life Assurance, up by Rs38.35 and 15.00, while Attock Petroleum and Siemens Pakistan were among the top losers, off by Rs13.30 and 84.00.

Trading volume showed a modest rise at 274 million shares from the previous 266 million shares but losers held a fair lead over the gainers at 178 to 150, with 44 shares holding on to the last levels.

Lucky Cement topped the list of actives, off Rs2.40 at Rs127.80 on 21 million shares, followed by Bosicor Pakistan, up one rupee at Rs20.45 on 20 million shares, Fauji Cement, firm by 65 paisa at Rs21.45 on 18 million shares.