KARACHI, Feb 7 (Reuters) - A rally in Pakistani banking shares helped lift the bourse to end on a six-and-a-half month high on Tuesday as foreign investors snapped up local stocks on the back of expected strong corporate results, dealers said.
The Karachi Stock Exchange (KSE) benchmark 100-share index gained more than one percent for a second straight day, closing up 1.22 percent or 147.70 points, at 12,284.62 points, its highest close since July 26, 2011.
Volume fell to 162.11 million shares, compared with 196.3 million traded on Monday.
“The bullish trend continued on renewed foreign investment led by banking stocks in the earnings announcement session at KSE,” said Ahsan Mehanti, director at Arif Habib Corp Ltd.
Foreign investors bought shares worth a net $3.47 million on Monday. Data for Tuesday will be released later in the day.
Winners on the KSE included Bank Alfalah, which closed 2 percent higher at 12.75 rupees, and National Bank of Pakistan, which rose 2.85 percent to 46.58 rupees.
In the currency market, the rupee ended weaker at 90.62/67 to the dollar, compared with Monday’s close of 90.50/56 due to increased import payments, particularly oil.
Dealers said they were also cautious after the International Monetary Fund advised Pakistan to take immediate steps to tackle growing budget pressures and raise interest rates to contain inflation.
The IMF projected a widening of Pakistan’s fiscal deficit in the 2011/12 fiscal year to 7 percent of gross domestic product, compared with the government’s revised budget target of 4.7 percent.
The rupee touched a record low of 91.28 to the dollar on Jan. 9, pressured by worries about higher payments for oil imports and the country’s overall economic health, especially a weakening current account.
The current account recorded a provisional deficit of $2.154 billion in the first six months of the 2011/12 fiscal year, compared with a surplus of $8 million in the same period last year, according to data from the State Bank of Pakistan.
The deficit is likely to widen further in coming months because of debt repayments and a lack of external aid.
In the money market, overnight rates ended lower at between 11.25 percent and 11.75 percent, compared with Monday’s close of 11.90 percent after the central bank bought back government paper worth 37 billion rupees ($408.70 million). (Reporting by Sahar Ahmed; Editing by Serena Chaudhry)