KARACHI: After four sessions of nightmare at the Karachi stock market which saw the KSE-100 index plunge by 959 points, the last day of trading on Friday saw a measure of stability returning to the market as the index managed to close just on the fringes of the green with gain of 0.36 points. The index badly battered closed at 22,714.68 points.

The investors are worried over the upcoming SBP Monetary Policy which much of the market thought could disclose an upward revision of discount rate between 0.5 to 1 per cent based on the higher inflationary figures for July and the possibility of double digit inflation by the end of the calendar year.

Some market participants thought that the IMF may have pushed the government to raise the rates in negotiations for a fresh loan. “While the market had priced in 5pc increase in interest rates, there were concerns over declaration of a higher discount rate,” said an analyst.

Having enjoyed soft interest rates policy for quite some time, the equity investors expressed concern that the higher rates would impact the bottom lines of companies mainly on the cement and textile sectors, and mainly those corporates which were highly leveraged.

The heavy increase in gas tariff was also thought to raise cost of production for companies across all sectors. And finally, the meltdown in emerging markets was feared to spread to the local bourses, resulting in outflow of foreign portfolio investment.

However, the sell-off at the KSE which had eased on Thursday, saw the return of investor confidence on Friday. The index, however closed flat after oscillating between the high and low of 22,936.35 and 22,583.89 points. The fear of flight of foreign investment was dissipated as foreign fund managers bought equity worth $0.389 million on Friday.

Analyst at JS Global, Khalil Usmani stated that investors preferred to stay side lined as the ambiguity regarding discount rate, which continues to haunt the market. Banking sector remained the pick of investors as any upward change in Discount Rate would boost the overall banking sector. Investors were sellers in the oil sector as PSO, POL and OGDC closed down 0.4pc, 0.1pc and 1.3pc respectively on Friday.

Equity sale dealer, Samar Iqbal at Topline Securities stated that the local bourse closed marginally up. Though local bourse got some support amid improved regional equity markets but sentiments remained week due to uncertainty regarding monetary policy . Renewed buying interest was seen in Pakistan Telecom and United Bank gained 2.5pc after healthy earnings and handsome dividend announcement, while National Bank witnessed continued selling pressure after its disappointed June result announcement on Thursday.

In all 343 stocks were traded on Friday with gainers at 180, ahead of the losers at 143. Turnover declined 21pc to 172m shares from 217m shares and the trading value decreased by 34pc to Rs6.842 billion, from Rs10.263bn. Market capitalization slipped by Rs4bn to Rs5.612 trillion.

On the active list, Bank of Punjab saw the highest volume of 19m shares, up 43 paisa to Rs13.02; Engro Polymer gained 92 paisa to Rs13.83 on 14m shares; Nimir Ind. Chemicals hit the ‘upper circuit’ of Re1 to Rs6.01 on 14m shares; Fauji Cement shed 15 paisa to Rs14.27 on 9m shares; NIB Bank edged lower by one paisa to Rs2.47; Engro Foods rallied by Rs2.32 to Rs109.52 on 5m shares; mid-tier Cement stock, Lafarge Pakistan rose 31 paisa to Rs8.40 on5m shares; Maple Leaf Cement shed 45 paisa to Rs26.85 on 3m shares and PTC was up 32 paisa to Rs25.64 on 3m shares.