Weekly review : KSE-100 flirts with 12,000-point barrier
Interest in energy and power sector triggers rally at bourse.
KARACHI:
A midweek rally, sparked by interest in the energy and power sector, saw the benchmark KSE-100 index rise 2.31 per cent (270 points) during the week ended April 22.
The exploration and production (E&P) sector, which had largely underperformed in recent months, took centre stage and led the recovery of the market after a stagnant start to the week. The Oil and Gas Development Company (OGDCL) was the star performer, climbing more than seven per cent during the week.
Earlier, the week started on a negative note as there was an outflow of foreign funds and the index dropped 0.7 per cent in the opening two days. Volumes were also dismal and there was little interest despite the ongoing earnings announcement season.
All that changed on Wednesday as investors flocked to the E&P sector, particularly OGDCL, as stocks were trading at attractive valuations. The market rose three per cent in the last three days of the week to close at 11,954 points – on track to surpass the 12,000-point barrier in the coming week.
OGDCL, the largest company in Pakistan in terms of market capitalisation and the single most heavily weighed company on the index, was trading at Rs129 per share at the start of the week, down 24 per cent from Rs170 per share in February.
The attractive valuation of the company, along with rising global oil prices, sparked investor interest and triggered a rally in the market with the E&P sector leading the way. OGDCL climbed 7.8 per cent during the week to close at Rs139.8, while Pakistan Petroleum rose 2.9 per cent to close at Rs212.3.
Other news during the week was largely mixed and had little impact on the proceedings at the stock exchange.
Concerns were raised over rumours circulating in the market that the corporate income tax rate would be raised to 40 per cent from 35 per cent in the upcoming budget. Furthermore, gas supply issues remained in the news as fertiliser manufacturers complained of low gas supply, which put the fertiliser sector under pressure during the week.
Macroeconomic numbers provided some positivity to investors as there was a current account surplus of $347 million in March, largely as a result of higher exports and remittances during the month. This resulted in the current account standing with a surplus of $99 million for the July-March period.
Investment in the Margin Trading System stood flat at Rs333 million between Monday and Thursday, compared with Rs340 million in the previous week. Average financing rate stood at 16.13 per cent, compared with 16.65 per cent in the previous week.
Although average volumes remained flat at 62 million shares per day, the total traded value per day shot up by 48 per cent to Rs3.43 billion, reflecting that much of the trading took place in more expensive first-tier stocks of the E&P sector. The index’s market capitalisation also rose by 2.1 per cent and stood at Rs3.17 trillion.
What to expect?
The market can be expected to perform solidly in the coming week, as the rally in the E&P sector may continue because OGDCL will announce its result for the first nine months of the current fiscal year. Sector-specific rallies can also take place in the event of surprising earnings announcements.
Monday, April 18
The index fell 9.4 points after growing concerns over rising inflation, a widening fiscal deficit, and higher global
commodity prices. Expectations of encouraging corporate
earnings in the results season were unable to lift investor interest.
Tuesday, April 19
The index fell 75.55 points after brushing aside positive news of the current account recording a $99 million surplus in the July-March period. A change in the hierarchy of the oil and gas sector was not welcomed and played a catalyst role in the negative close.
Wednesday, April 20
The index gained 145.78 points after positive investor sentiment prevailed ahead of major earning announcements this week. A recovery in global stocks and commodities, along with talk of political stability on the
domestic front, triggered a buying spree across the board.
Thursday, April 21
The index surged 178.53 points as equities continued their upward rally spurred by local buying in the oil sector. Banks and cement companies were also in the green due to expectations of healthy corporate earnings, and news that India had approved import of cement from Pakistan.
Friday, April 22
The index gained 30.78 points, crossing the 12,000-point level during trade. The market lost strength but oil and energy stocks kept the index in check. Rising foreign exchange reserves, recorded at $17.38 billion, also played a significant role in the positive close.
Published in The Express Tribune, April 24th, 2011.
A midweek rally, sparked by interest in the energy and power sector, saw the benchmark KSE-100 index rise 2.31 per cent (270 points) during the week ended April 22.
The exploration and production (E&P) sector, which had largely underperformed in recent months, took centre stage and led the recovery of the market after a stagnant start to the week. The Oil and Gas Development Company (OGDCL) was the star performer, climbing more than seven per cent during the week.
Earlier, the week started on a negative note as there was an outflow of foreign funds and the index dropped 0.7 per cent in the opening two days. Volumes were also dismal and there was little interest despite the ongoing earnings announcement season.
All that changed on Wednesday as investors flocked to the E&P sector, particularly OGDCL, as stocks were trading at attractive valuations. The market rose three per cent in the last three days of the week to close at 11,954 points – on track to surpass the 12,000-point barrier in the coming week.
OGDCL, the largest company in Pakistan in terms of market capitalisation and the single most heavily weighed company on the index, was trading at Rs129 per share at the start of the week, down 24 per cent from Rs170 per share in February.
The attractive valuation of the company, along with rising global oil prices, sparked investor interest and triggered a rally in the market with the E&P sector leading the way. OGDCL climbed 7.8 per cent during the week to close at Rs139.8, while Pakistan Petroleum rose 2.9 per cent to close at Rs212.3.
Other news during the week was largely mixed and had little impact on the proceedings at the stock exchange.
Concerns were raised over rumours circulating in the market that the corporate income tax rate would be raised to 40 per cent from 35 per cent in the upcoming budget. Furthermore, gas supply issues remained in the news as fertiliser manufacturers complained of low gas supply, which put the fertiliser sector under pressure during the week.
Macroeconomic numbers provided some positivity to investors as there was a current account surplus of $347 million in March, largely as a result of higher exports and remittances during the month. This resulted in the current account standing with a surplus of $99 million for the July-March period.
Investment in the Margin Trading System stood flat at Rs333 million between Monday and Thursday, compared with Rs340 million in the previous week. Average financing rate stood at 16.13 per cent, compared with 16.65 per cent in the previous week.
Although average volumes remained flat at 62 million shares per day, the total traded value per day shot up by 48 per cent to Rs3.43 billion, reflecting that much of the trading took place in more expensive first-tier stocks of the E&P sector. The index’s market capitalisation also rose by 2.1 per cent and stood at Rs3.17 trillion.
What to expect?
The market can be expected to perform solidly in the coming week, as the rally in the E&P sector may continue because OGDCL will announce its result for the first nine months of the current fiscal year. Sector-specific rallies can also take place in the event of surprising earnings announcements.
Monday, April 18
The index fell 9.4 points after growing concerns over rising inflation, a widening fiscal deficit, and higher global
commodity prices. Expectations of encouraging corporate
earnings in the results season were unable to lift investor interest.
Tuesday, April 19
The index fell 75.55 points after brushing aside positive news of the current account recording a $99 million surplus in the July-March period. A change in the hierarchy of the oil and gas sector was not welcomed and played a catalyst role in the negative close.
Wednesday, April 20
The index gained 145.78 points after positive investor sentiment prevailed ahead of major earning announcements this week. A recovery in global stocks and commodities, along with talk of political stability on the
domestic front, triggered a buying spree across the board.
Thursday, April 21
The index surged 178.53 points as equities continued their upward rally spurred by local buying in the oil sector. Banks and cement companies were also in the green due to expectations of healthy corporate earnings, and news that India had approved import of cement from Pakistan.
Friday, April 22
The index gained 30.78 points, crossing the 12,000-point level during trade. The market lost strength but oil and energy stocks kept the index in check. Rising foreign exchange reserves, recorded at $17.38 billion, also played a significant role in the positive close.
Published in The Express Tribune, April 24th, 2011.