RECORDER REVIEW
KARACHI: The Karachi stocks market stayed bearish throughout last week on the back of what equity analysts believe futures rollover, increased foreign outflows and lack of triggers.
Amid lackluster trading volumes, the benchmark index lost 1.1 percent, Week-on-Week, to close at 33,632 points on Friday. The average daily trading volumes for the week dipped 19 percent to 172 million shares.
"The rollover of futures contracts and net foreign selling of $9.6 million kept investors' sentiments bearish, despite strong corporate announcements," viewed JS analyst Raheel Ashraf.
The week under review was meant for the rollover of March futures contracts.
The lack of positive major triggers also, analyst Abdul Azeem said, played a role in keeping the volatile market bearish.
Further, the lack of interest was seen from offshore investors as their net selling accumulated to $9.78 million as compared to a net buying of $9.33 million in the preceding week.
"The foreign investors were taken a back by the news that withholding tax on capital gains would stay for foreign institutional investors," Azeem opined.
A sector-wise account shows that the oil and gas scrips remained under pressure on the back of volatility in international crude oil prices. Sales were triggered in Oil and Gas Development Company, Pakistan Oilfields Limited, Pak Petroleum Limited and Pakistan State Oil.
Through announcing expected financial results, the National Bank of Pakistan and Faysal Bank kept investors' eye on the banking sector.
The cement sector stayed under pressure with reports of DG Khan Cement planning to go for expansion, a potential setback for the industry in terms of quota and price arrangement. Overall, profit-taking kept the sector subdued.
In auto sector, Indus Motor, by gaining 8.7 percent, outperformed the market over rumors of potential buyback of shares by Toyota. Azeem saw some positives overshadowed by the lack of some new catalysts.
Raheel said the government eying financial closure of 10,400MW projects in March, Large Scale Manufacturing expanding by 2.65 percent YoY in 1HFY15, oil import bill declining by 53 percent YoY and 33 percent MoM in Jan-2015 and National Assembly body approving amended GIDC bill were key highlights of the week.
Going forward, outlook for the bourse, the analysts said, was positive.
Given declining inflationary pressures in the country, the central bank was likely to go for another 50 basis points cut in its discount rate in upcoming Monetary Policy Statement. "The inflation numbers are very sensitive at this point of time as investors would take cue of the central bank's decision on interest rates," said Azeem.
Any rate-cut, he added, would support the leveraged stocks to reduce their financial expenditure while further squeezing the banking spreads.
"We expect that decline in interest rate would stimulate the credit off-take of the banks," said the analyst.
