SHARES closed modestly higher at the Karachi Stock Exchange with a gain of 107 points or 0.79 per cent in the week ending on June 15.
The previous week, KSE-100 index had taken a plunge of 318 points or 2.3 per cent. Slight recovery was noted on Monday. But the market soon resumed the fall in the next few sessions. The bulls, however, returned with a vengeance on Thursday to a big gain of 318 points. Including a minor addition of 9.60 points on the last session, the benchmark KSE-100 index settled at 13,665.80 points.
Average daily volumes stood at 86.4 million shares, which represented 9.3 per cent drop over the earlier week’s average daily trading of 95 million shares.
Foreign investment outflow during the week amounted to $83.6 million, which included one-off payment for acquisition of strategic 200 million shares of Hubco at Rs31 per share by the local conglomerate.
Excluding Hubco sale proceeds, the foreigners sold $17.6 million worth equity during the week. The exodus of foreigners was said to be triggered by rapid erosion in value of the Pakistani rupee; the local currency having suffered fall of 3.6 per cent since May 1. An equity dealer pointed out that the foreigners’ fear over the rupee fall was exacerbated by sell-off in regional markets.
Analysts said a three-day slide was quickly reversed on Thursday upon successful passage of the Finance Bill 2012 by the parliament which enabled the market to end in the green territory. Among significant developments during the week was the government’s approval of significant cut in petroleum product prices ranging between 6 to 10 per cent and the notification of final tariff of 225MW Narowal expansion of Hub Power Company, which analysts thought should add to clarity on the project’s cash flows.
Meanwhile, auto sales showed a 26 per cent surge during May over the previous week, driven largely by Pak Suzuki Motor Company volumes. On the macro front, remittances were unhindered, sticking to their average run rate of crossing $1 billion per month.
Analyst Naveed Tehsin at JS Global observed that the week started off with extremely dull investor sentiment amid turbulence in domestic political environment and US-Pakistan relationship. However, the approval of Finance Bill by National Assembly cleared ambiguities pertaining to the revised Capital Gains Tax (CGT) regime and helped in regaining investor interest. The analysts also concurred regarding other positives that spurred buying in the last session.
Equity dealer Samar Iqbal at Topline Securities observed that in spite of attractive valuation, due to foreign outflow, the jittery relations between US-Pakistan left volumes of trading at a dull level. However, National Assembly’s budget approval that subsequently gave CGT Ordinance a legal cover, created positive vibes in the market.
Equity dealers noted that during the week trading activity was led by Jah.Sidd.Co with volume of 39.41 million shares, followed by PTCL 34.93 million shares, D. G. Khan Cement 28.63 million shares and Engro 22.81 million shares.
Leading gainers during the week were: Pak Suzuki Motor Company, Hubco, Fauji Fertiliser Bin Qasim, Meezan Bank, D. G.
Cement Co, Philip Morris, Media Times, Standard Chartered Bank and Rafhan Maize. The major loser included Sui Northern Gas, Lucky Cement, PSO, Unilever Pakistan Foods, Ibrahim Fibers, Indus Dyeing and Pakistan Tobacco Company.
Most market participants expected a tumultuous week ahead. Starved of triggers, investors’ attention would remain glued to politics given the case on a ruling by Speaker National Assembly on PM’s disqualification and the long awaited improvement in Pakistan-US relationship on resumption of dialogue. Also the Morgan Stanley Composite Index (MSCI) Annual Review is due on June 20, which was thought to guide the market to an upward direction. But everyone agreed that the key questions were whether the retail investors would re-enter the market and would the volumes receive a boost. —Dilawar Hussain