KARACHI, Oct 3: The Karachi Stock Exchange (KSE) achieved two milestones on Wednesday as it hit a new all-time high of 15,747.64 points and ended at its highest ever level of 15,712.21 points, after a gap of four and a half years, buoyed by expectations of a cut in the State Bank of Pakistan’s key policy rate due to be announced on Friday.

The previous record high was 15,737.32 and it’s highest ever closing was 15,676.34, both achieved in April 2008.

The KSE 100-share index ended 0.41 per cent, or 63.02 points, to record high of 15,712.21 points. Turnover however decreased to 107.65 million shares, compared with 140.79 traded on Tuesday, as some investors were cautious and preferred to stay on the sidelines as the index breached its previous all-time high.

Trading value fell to Rs4.2 billion from the previous day’s value of Rs5.96 billion but market capitalisation rose to Rs3.96 trillion, compared with Tuesday’s Rs3.95 trillion.

“The market had a historic day as it ended at its highest ever closing level on expectations of a rate cut and also due to strong corporate earnings,” said Ahfaz Mustafa, director at Ismail Iqbal Securities Ltd.

“The market should continue this trend till at least the monetary policy announcement.”The State Bank is due to unveil its monetary policy on Friday and analysts expect a cut in the discount rate from as low as 50 basis points up to 150 basis points. SBP cut its policy rate by 150 basis points to 10.5 per cent in August.

When a central bank reduces interest rates, then usually it prompts investors to move money away from the bond market to the equity market on the hope of higher returns.

“Investors believe that further decline in the interest rate will trigger money flow to the stock market,” said Samar Iqbal, a dealer at Topline Securities Ltd.

The market has also been supported by strong corporate earnings which on average closed 16 to 18 per cent higher year-on-year.

The rally on Wednesday was mainly led by middle tier stocks as blue chips, especially in energy sector, saw some profit-booking such as Oil and Gas Development Co Ltd which shed Rs1.82 to close at Rs181.09.

Energy sector was under pressure as international oil prices fell more than $2 per barrel as weak data intensified worries about the global economy and the outlook for oil demand.

Foreign investors were net sellers on Wednesday as there were net outflows of close to $1 million, but have bought shares worth a net $62.28 million this year. Companies were major buyers of equity in the market, worth $5.25 million.

The FMCG posted handsome gains as Unilever witnessed the largest increase of Rs500 to close at Rs10,500, followed by Nestle Pakistan Ltd which rose Rs221.25 to end at Rs4,646.26.

Rafhan Maize Prod had the largest decrease as it fell RS99 to Rs3,800 followed by Atlas Battery which shed Rs6.95 to close at Rs237.

The following companies were the ten most active in the market on Wednesday: Jahangir Siddiqui Co, volume leader, gained 56 paisa to Rs13.99 on turnover of 13.35 million shares, Nishat Mills Ltd rose Rs1.35 to Rs58.85 on 4.57 million shares and Askrai Bank marginally ended 6 paisa higher at Rs15.47 on 4.32 million shares.

PTCLA gained 20 paisa to Rs19.76 on 4.23 million shares, Azgard Nine rose 13 paisa to Rs6.19 on 3.77 million shares and Attock Refinery Ltd ended Rs7 higher at 147.03 on3.72 million shares.

Fauji Fert Bin increased by 6 paisa to Rs39.23 on 3.58 million shares but Engro Corp fell 58 paisa to Rs108.18 on 3.4 million shares and Pace (Pakistan) Ltd shed 1 paisa to Rs3.22 on 3.15 million shares.

Engro Foods closed 66 paisa lower at Rs71.84 on 3.1 million shares.