KARACHI:
The stock market plummeted 190 points in the first two days of the week on news of the Muttahida Qaumi Movement quitting the coalition government. The first day investors held back but after reports confirmed the next day they started to press the ‘sell’ button.
However, few corporate triggers salvaged the market later in the week and sent it upwards to recover the early losses. The benchmark Karachi Stock Exchange (KSE) 100-share index was up only 20 points or 0.2 per cent on a weekly basis while average volumes dropped eight per cent to 35 million shares.
An interesting observation though was a 32 per cent decline in the average traded value as heavyweights like MCB Bank, Engro and Pakistan Petroleum witnessed massive battering, said JS Global Capital analyst Sana Hanif in a research note. When it came to foreign investors, KSE witnessed a net outflow of $38 million compared with last week’s net outflow of only $3.6 million.
Nestle, however, continued to dominate the market and rose 15 per cent on rumours of foreign buying. The scrip has gained 131 per cent in the first half of the year.
Fertiliser stocks, apart from Fatima Fertiliser, remained laggards for most part of the week on reports of an expected increase in gas tariff.
Initial interest seen on Engro’s announcement of urea price hike was dispelled by the market following the announcement of the government’s plan to double gas prices for the fertiliser industry which led to profit taking in Fauji Fertiliser Company and Fauji Fertiliser Bin Qasim particularly on Thursday. Engro and Fatima gained as they are expected to benefit from subsidised gas prices under the Fertiliser Policy 2001. The immune scrip, Fatima Fertiliser jumped 11.3 per cent to close at Rs16.58.
Moreover, the government, on the recommendation of its financial advisers decided to defer the Oil and Gas Development Company’s exchangeable bonds issue, keeping in view the weak performance of global capital markets. The market took the stock down 0.4 per cent to close at Rs152.29.
Textile sector was amongst the major underperformers largely on news of Worked Trade Organisation not granting Pakistan access to EU markets. Textile stocks Nishat Mills and Nishat Chunian closed down 7.5 per cent and 4.3 per cent, respectively, during the week.
Monday, June 27
Local investors stayed away from the market on the first trading session of the week due to falling international bourses and domestic political tensions. Fallout of European markets has heightened risk of further foreign selling.
Tuesday, June 28
The stock market plummeted following tensions after Muttahida Qaumi Movement decided to quit the coalition government. Heated political environment triggered the long-awaited slump, which was delayed by stagnation.
Wednesday, June 29
Equities rebounded sharply to recover the preceding day’s losses amid relatively low volumes. The gain was mainly supported by illiquid stocks as Nestle alone contributed around 38 points to total gain of 60 points.
Thursday, June 30
The stock market gained in late buying after the bourse remained around the neutral line for most of the day. Renewed buying interest in the oil and fertiliser sector led the rally.
Friday, July 1
The new financial year started off on a very low note as volumes fell to a nine-month low. Thin trading activity was witnessed as merely Rs1.2 billion was the value of shares traded due to July 1 being bank holiday.
Published in The Express Tribune, July 3rd, 2011.
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