RECORDER REVIEW

KARACHI: Karachi Stock Exchange continued to post a positive momentum during the last week ending on Nov 21, and the benchmark KSE-100 closed at 31,495 points, up by 0.5 per cent. Followed by cut in policy rate by the SBP, during the week the KSE-100 also touched a new high, however, the market could not sustain its upward journey due to profit-taking in selected scrips.

Abdul Azeem, an analyst at InvestCap, said Karachi Stock Exchange opened the last week on a positive note and positive sentiments prevailed due to a cut in the policy rate by 50 bps by the State Bank of Pakistan (SBP). He said that easing monetary policy was expected due to low CPI. Therefore, positive sentiments among investors continued during the first two days of the week and carried the KSE-100 index to a new high of 32,006 level.

However, the investors’ sentiments changed when the negative developments emerged during the week, including the SECP decision to place KASB Bank under suspension for six months, halting the trading activities of the bank’s brokerage house, mounting political tension between the government and PTI, which is planning to hold a big protest rally against the government on 30th November in Islamabad, swelling the current account deficit and increasing energy receivables. These events created a panic among the investors and the KSE-100 witnessed a colossal selling pressure along with massive profit-taking on Wednesday and Thursday, which pushed the index downwards to 31,026 points during the same trading session, he mentioned.

The stock market somewhat recovered on the last trading day of the week, from extreme decline and finally closed at 31,494.84 points compared to 31,344 points a week earlier, depicting an increase of 151 points or 5 per cent (WoW).

The average traded daily volume during the week ticked at 259 million shares which showed a decrease of 8.6 per cent (WoW) down from 283 million. Net foreign equity inflows were $4.81 million as compared to last week’s $10 million net inflow a decrease of 52 per cent (WoW). The decrease in foreign inflow and average daily volumes is due to the panic created in the market during the week. During the last week, the market capitalisation declined by 0.03 to Rs 7.289 trillion down from Rs 7.307 trillion.

Talking about the market future, Azeem said that the declining trend in Pakistan Investment Bonds yields coupled with expected drop in National Savings Scheme returns would support the equity market going forward.

Moreover, the assurance of the S&P for stable long-term sovereign credit rating along with expected inflows from the IMF and Sukuk bonds will improve the health of the BoP, may also support the market, he added.

Raheel Ashraf, an analyst at JS said that the Karachi share market on Monday cheered the State Bank of Pakistan’s (SBP) 50 bps cut in discount rate and gained some 358 points, leading to the KSE-100 index crossing the psychological barrier of 32,000 on Tuesday. However, with the SBP placing six-month moratorium on KASB Bank, the SECP suspended trading activities of its brokerage subsidiary resulting in panic selling by some investors during mid-week, he added.

But attractive valuations brought back investors’ interest into the market on Friday despite the incumbent government gearing up to face a strong protest from Gas utilities outperformed the market during the week as the ECC approved policy guidelines for Ogra to allow an average 30 per cent hike in gas tariff. While, 1QFY15 fiscal deficit clocking in at 1.2% of the GDP, Current Account deficit in Oct-2014 widening to $347 million, FDI rising by 47 percent YoY in 4MFY15 and Cotton arrivals rising by 10 percent YoY to 10.44 million bales in YTD FY15 were some other highlights of the week, Raheel said.