INVESTORS in shares at the Karachi Stock Market moved cautiously in the last week of trading for 2012.

The KSE-100 index climbed to all time high level at 16,943 points at the end of trading on Friday, showing a marginal gain of 0.46 per cent or 78 points over the earlier week’s closing. The index was shy of crossing the psychological barrier of 17,000 points.

Yet brokers’ optimism that it would push through towards the 18,000 level early next year was tempered by caution: “Heading into 2013, investors know that few of the economic and law and order problems have been solved”, said a pragmatist among analysts.

The investors’ caution was also fuelled by the fact that the financial reporting season was just around the corner. Although some interest shifted towards high yielding stocks, trading activity remained tilted towards second and third tier (low priced) stocks. Small cap stocks have continued to benefit from improving risk appetite, though many market watchers have warned investors of taking large exposure in little known smaller companies, particularly in the textile sector.

Foreign investors decided to book profit at the current levels and sold equity worth $5.6 million during the week, compared to a nominal sale of shares valued at $0.14 million, the earlier week. “Foreign fund managers would reallocate portfolio for different countries in the emerging and frontier markets when the markets opens after the New Year holidays”, says a stock strategist. He hoped there would be a bigger allocation for Pakistan capital markets due to its splendid performance in 2012, giving out a return of 49.33 per cent, one of the highest in the region. The other big return on equity was provided by Philippines where stock prices rose by 33 per cent. The Indian Sensex index revealed the full year growth by 25.82 per cent. The Standard & Poors’ that tracks US equities posted return of 13 per cent for the year 2012.

Market capitalisation of KSE again saw relatively slight change to Rs4.257 trillion, from Rs4.232 trillion at the close of previous week.

The average daily volumes dipped by 0.3 per cent to 137.89 million shares from 138.33 million shares of daily turnover seen the earlier week. Average daily traded value showed a larger fall of 11.8 per cent to Rs3.08 billion, from Rs 3.50 billion the week before. The fall in volume and value was also attributable to a shortened trading week of four days, compared to usual five days as the markets remained closed on December 25 on account of public holiday.

Analysts at JS Global said that on the macro front, foreign exchange reserves were up by $169 million to $13.4 billion while this week’s T-bill auction saw State Bank of Pakistan rejecting all the bids, expressing the view that rates should be lower. Moreover, Pakistan also received on Friday the much awaited $688 million on account of Coalition Support Fund (CSF), which analyst said, should partially alleviate near- term external account and currency concerns.

0ther key highlights of the week were: announcement by OGDC of gas discovery in Zin Block. The news was, however, received with a lukewarm investor interest. Also, the Asian Development Bank during the week approved $245 to improve power distribution system. The fertiliser numbers were released according to which urea sales in November 2012 surged by 40 per cent over the earlier month to 445,000 tons. The improved sales figure was thought to be the result of higher demand in the peak Rabi season.

During the week, stocks which stood out as leading gainers included: Ghani Glass; TPL Trakker Limited, Engro Foods Limited, Askari Bank; Unilever Pakistan, Fauji Cement, Pakistan Oilfields, Hub Power Company, Fauji Fertilizer, OGDC, Lucky Cement and Nishat (Chunian).

The laggards included Engro Corporation, Adamjee Insurance, Honda Cars, Pakistan International Container Terminal, IGI Insurance, J.D.W Sugar, KESC and Murree Brewery.

The volume leading stocks during the week included: TRG Limited; KESC, Fauji Cement, Engro Foods, Byco Petroleum, Maple Leaf Cement, PIA and Jah.Sidd. Co. Limited.

Future Outlook: Analysts at brokerage KASB Securities said that heading into the New Year balance of payments position and potential re-entry into IMF programme could figure prominently during the first quarter and could dictate market movements. Moreover, politics was also expected to heat up in the run-up to the caretaker setup and eventual roadmap for general elections.

Analysts at AKD Securities stated in regard to the future outlook, that the $688 million in CSF received on Friday should help improve balance of payment position and reduce pressure on rupee.

“The looming elections will focus investor attention on the political landscape where investor are likely to react sharply to major political events”, AKD Securities said.—Dilawar Hussain