Weekly review: After disastrous start, market recovers most of its losses

Bourse recoups losses on recovery in oil prices, positive domestic developments.

KARACHI:

As the week filled with high emotions came to an end, the Karachi Stock Exchange (KSE) breathed a sigh of relief as the worse seemed to be over. The tumultuous week resulted in the KSE-100 index closing 0.2% down week-on-week.

Panic selling, as a result of the meltdown of global equities and currencies on concerns over the slowing world economy, sparked heavy offloading at the bourse at the beginning of the week and the index lost 4.1% (1,419 points) on Monday.

However, the latter part of the week followed a recovery course as interest rate cut and a change in reserve ratio requirement by China on Wednesday helped pacify sentiments in the markets.

The KSE-100 index recovered 2.7% in the last two trading sessions, led by value buying, particularly in oil stocks, as crude prices jumped over 10% on Thursday, marking its biggest one-day gain since 2009. Earlier in the week, the decline in international crude oil prices pushed the oil and gas sector down 9%. However, a sharp recovery in crude prices on Friday helped oil company stocks to recoup losses and they closed down 3.1% week-on-week.

Shares of financial institutions also took a hit in the wake of investor speculation about another interest rate cut by the State Bank of Pakistan in the backdrop of easing inflationary pressures.

MCB Bank and Oil and Gas Development Company were the prime movers as they erased 81 and 61 points off the index. However, cement stocks added 82 points and provided support to the index with other sideboard sectors also chipping in.

Foreign selling continued to dominate the market as foreigners during the week sold shares worth $42.2 million. Their total net selling for the month reached $79.9 million while year-to-date net selling touched $175.7 million.

Banks, with offloading of $12.2 million worth of shares, was the sector that recorded the largest foreign selling, closely followed by the oil and gas sector with $10.9 million and electricity companies with $7.2 million. Trading volumes averaged 187 million shares per day, up a significant 17% week-on-week, with K-Electric contributing the most volumes at 153 million. Local mutual funds were other net sellers in the market, who sold shares worth $15 million.

Some relief was noted during the week following the announcement of hefty earnings by Indus Motor Company, which saw its profits surge 73% year-on-year.

Similarly, the signing of a memorandum of understanding by the Karachi, Lahore and Islamabad stock exchanges to integrate and set up a uniform exchange called the Pakistan Stock Exchange was received with enthusiasm that brought stability to the market.

Winners of the week

Pakistan Tobacco Company



Pakistan Tobacco Company Limited manufactures and sells cigarettes.

Murree Brewery Company



Murree Brewery Company Limited specializes in the manufacture of beer and Pakistan made foreign liquor. The group also has juice extraction and food manufacturing divisions, located at Rawalpindi and Hattar respectively. Their glass division manufactures all the group’s bottles and jars.

Maple Leaf Cement Factory



Maple Leaf Cement Factory Limited produces and sells cement products in Pakistan.

Losers of the week

Bata Pakistan Limited



Bata Pakistan Limited manufactures and sells rubber, leather, and microlon sandals and shoes.

Sui Southern Gas Company      



Sui Southern Gas Company Limited transmits and distributes natural gas, and constructs high pressure transmission and low pressure distribution systems. The company’s transmission system extends from Sui in Balochistan to Karachi in Sindh.

Atlas Battery Limited                 



Atlas Battery Limited manufactures and sells automotive and motorcycle batteries. The company operates in Pakistan.

Published in The Express Tribune, August 30^th, 2015.

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