THE Karachi stock market has seen a good year so far. The benchmark KSE-100 index gained 3,221 points or 28 per cent in six-and-a half months of the current calendar year.

The index, which stood at 11,347 points in January has climbed to 14,500 points by the end of this week. For the investors in stocks it comes as a big blessing after the loss of 675 points, representing negative return of 5.6 per cent the previous year.

With the arrival of the holy month of Ramazan, investors have begun to wonder if the rally would cool off. Yet history suggests that share prices have kept up the rising trend during Ramazan, alluding to the possibility of faithfuls keeping one eye on the stock index while praying and making best efforts to seek divine blessings.

The rise in index during the holy month could be witnessed in spite of the lower trading volume. And the drop in volume could be attributed to the decreased trading timings as well as investors’ desire to keep away from the market until the end of days of fasting and the start of the days of feasting. “The trading time is reduced by about an hour in the holy month, which obviously impacts turnover”, says veteran stock broker Haji Ghani Haji Usman.

Naveed Tehsin, analyst at the brokerage JS Global scrolled through the 10-year historical data. He observed that the trading volumes had averaged 220 million shares in the regular working days. But in the month of Ramazan, volumes on average dropped 32 per cent to 150 million shares. The decline, he asserted, could be due to reduced trading timings—five hours instead of six.

“Nevertheless, the market performance has been unaffected as the KSE-100 index has been able to record a 10-year average gain of 4.1 per cent during Ramazan”, says Tehsin.

Besides the shorter span of trading time, several brokers said the reduction in volumes during Ramazan was the result of lower interest of speculators and big players in the market. But several marketmen cautioned that the drop in volume was fraught with danger.

An analyst explained that taking advantage of absence of traders, some enterprising big investor, either working in isolation or in group, could steer the market direction in a relatively easier manner during Ramazan.

“The buying or selling of a particular player can dominate the index due to the absence of someone taking the counter-position in the market”, he argued.

Another ten-year study of the KSE-100 index average monthly gain during the year, compared to that in the month of Ramazan shows that excluding 2011, when the market was plagued by the lowest volumes in a decade and a negative return, the year 2008 was also a bad dream; the latter due to the senseless policy of regulators to put a ‘floor’ under the market fall, which eventually had the reverse effect. Except those two years, market moved upwards, albeit at the lowest one per cent in 2001, 2004 and 2005.

In 2009, the stocks performed exceptionally well giving a return of 16 per cent in the holy month—the highest in the decade. It was followed by 13 per cent gain in 2007 and 12 per cent the year before. Over the decade, the average return during Ramazan, therefore, works out to around seven per cent.

It would, of course, be hazardous to make a guess on whether the equities would follow the past trend, for as brokerages are required to remind investors that past trends are never guarantees of future trends. Then there are innumerable question marks over the country’s economy; the political situation and the ongoing judiciary-government row.

Pakistan is depending on the receipt of $1.34 billion on account of Coalition Support Fund (CSF) reimbursement, that the government has budgeted for the current fiscal. The US has not released the amount yet and most retail investors are on the sidelines, fearful of snags in the improvement of country’s relationship with the US.

Yet there is a silver lining in the month of Ramazan this year. It coincides with the peak of the result reporting season. The market is expecting healthy corporate results and payout from some prominent sectors and blue chip stocks, led by the cements.

Many market participants therefore continue to air optimistic views, believing that the corporate results of especially high dividend yielding stocks would provide further impetus to the market and investors could continue to take positions in high-growth scrips and prevent volumes from sinking.