Market watch: Earnings fail to bring excitement as index falls

Benchmark KSE-100 index sheds 77 points.

KARACHI: Activity stayed subdued at the Karachi bourse as corporate earnings season failed to bring in any excitement. Investors confined their money to very select retail-driven small cap cement stocks. Index heavy oil and gas, and banking sectors have been under selling pressure in the week due to rollover of futures contracts.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index lost 0.32% or 76.61 points to end at the 23,497.07-point level. Activity remained subdued as trade volumes fell to 214 million shares, compared with Thursday’s tally of 305 million shares.

Although the market fell due to oil and banking stocks, cement stocks, bucking the trend, attracted buying and stayed in the limelight, said Samar Iqbal, head of equity sales at Topline Securities. The cement sector has been a favourite buy for investors in anticipation of healthy earnings.



Fauji Cement, hitting its upper lock, attracted volumes which were more than a quarter of the total volume in the index as investors expect massive growth in earnings and cash payout this results season. Lafarge Pakistan and Maple Leaf Cement also attracted bullish sentiments on expectation of healthy results and good cement dispatch numbers.

Morning news of Etisalat taking interest in a local mobile company kept Pakistan Telecommunication Company also in the limelight – a stock that is already gaining attention after its earnings announcements and expected sharp increase in revenues going forward.

Moreover, Fauji Fertilizer Bin Qasim – the di-ammonium phosphate producer – closed almost flat after announcing half-yearly earnings lower than street estimates, however a cash payout kept sentiments cautious, but positive.

Despite positive earnings announcement and outlook, the index could not generate buying interest as most of the mainstream scripts like National Bank of Pakistan, Engro Corporation, Pakistan Petroleum and Pakistan State Oil remained under selling pressure because of the rollover week of futures contracts, said Wasi Khan, analyst at JS Global Capital.



Shares of 360 companies were traded on Friday. At the end of the day 162 stocks closed higher, 160 declined while 38 remained unchanged. The value of shares traded during the day was Rs8.66 billion.

Fauji Cement was the volume leader with 47.11 million shares gaining Re1 to finish at Rs17.19. It was followed by Lafarge Pakistan with 28.33 million shares gaining Rs0.52 to close at Rs10.97 and National Bank of Pakistan with 14.75 million shares climbing Rs0.54 to close at Rs57.72.

Foreign institutional investors were net sellers of Rs397 million, according to data maintained by the National Clearing Company of Pakistan.

Published in The Express Tribune, July 27^th, 2013.

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