The cut proved positive for some leveraged stocks
including Ezz Steel Co., Qalaa Holdings, Ghabbour Auto, Palm Hills Developments SAE and consumer names such as Juhayna Food Industries and Arabian Food Industries SAE, or Domty, according to Naeem Holding analysts.
"It will also provide some respite to leveraged stocks
, as debt servicing costs would decline."
Higher interest rate added to pressure on leveraged stocks
, which also dragged the index lower.
Led by second- and third-tier leveraged stocks
, the Karachi equities rallied on Friday to hit another all-time high of 35,456.59 points.
This liquidity contraction has resulted in punishing leveraged stocks
, and the leverage factor is likely to be present in the short term.
Strong economic outlook, record PSDP commitments and falling borrowing costs for leveraged stocks
played a catalyst role in the bullish activity.
- A sharp rate cut reinforces our non-consensus call of market re-rating in Nov'14and should heighten focus on high D/Y and leveraged stocks
. We lift our year-end KSE-100 target to 41000 pts (from 39500pts).