Weekly review: Five-day rally takes bourse to three-year high
Cement, banking and fertiliser sectors were the star performers of the week.
KARACHI:
Bullish sentiments prevailed at the stock market as a five-day upward trend took the benchmark KSE-100 index past the 13,000-point psychological barrier and in doing so, crossed a level last witnessed more than three years ago in June 2008.
The index rose 3% or closed at 13,089 points during the week ended March 2. Despite concerns regarding the changes in the Capital Gains Tax Regime and negative macro data, the market maintained its upward momentum on the back of strong performances by the cement, banking and the fertiliser sector.
Investor participation remained healthy throughout the week and averaged at 213 million shares traded, down 11% week-on-week. Meanwhile, foreign buying continued as foreigners were net buyers of $5.6 million worth of equity during the week.
The index witnessed no negative sessions throughout the week as and slowly inched towards the 13,000 point barrier, finally crossing it on Friday, when the index rose 1.1% with healthy volumes of 253 million shares traded.
The gains came despite some concerns about the CGT regime, as it was reported that the Federal Bureau of Revenue was insisting that declaring the source of income of investors be made compulsory at the bourse. However, this was debunked towards the end of the week by the Securities and Exchange Commission of Pakistan Chairman Muhammad Ali.
Negative news also came in the form of macro data, as the inflations numbers for February 2012 came in at 11%, on rising food and energy prices. The number is not expected to improve as the government further increased fuel prices in the beginning of March, and is expected to do the same in April, due to rising international oil prices.
However, investors remained undeterred and actively participated in the market. Heavy interest was witnessed in the cement sector, upon a healthy earnings outlook for the sector due to improved margins. The top three manufacturers, Lucky Cement, DG Khan Cement and Fauji Cement all rose by 6.9%, 9.5% and 20.3%, respectively, during the week.
The banking sector also performed impressively, as United Bank Limited rose 12.5% during the week in a follow up to its impressive result in the previous week. Bank Al-Falah and NIB Bank were also amongst the top performers of the bourse.
Not to be outdone, the fertilizer sector also impressed with Engro Corporation climbing by 7.1% after the announcement that gas supply to its new plant Enven will be restored by March 4. Fatima Fertilizer also rose 7.2% during the week. Engro’s new plant and Fatima’s plant have agreements with the government for gas supply at concessionary rates.
What to expect?
With the earnings season closing – only National Bank of Pakistan is scheduled to make an announcement on March 6 – the markets focus will shift to politics and clarity regarding the CGT regime. At the current high levels, a correction is also likely, and investors should trade cautiously at the market.
Renewed investor interest in oil and cement stocks on the first trading session of the week pushed the index to levels not seen since 2010.
The stock market closed flat as investors build new position by selling and accumulating stocks. National Bank of Pakistan was by far the top performer over expectations of better earnings.
The stock market jumped 139 points as news that Iran has offered to provide crude oil to Pakistan on deferred payments rose investor sentiments.
The stock market surged to cross the 12,900-point mark as investor sentiments rose on the back of trade list finalisation with India and continued foreign buying.
The stock market is climbing at its own pace but is now within touching distance of levels last seen before the 2008 financial crisis. Across the board rally helped the benchmark index cross the key 13,000-point barrier for the first time since June 2008.
Published in The Express Tribune, March 4th, 2012.
Bullish sentiments prevailed at the stock market as a five-day upward trend took the benchmark KSE-100 index past the 13,000-point psychological barrier and in doing so, crossed a level last witnessed more than three years ago in June 2008.
The index rose 3% or closed at 13,089 points during the week ended March 2. Despite concerns regarding the changes in the Capital Gains Tax Regime and negative macro data, the market maintained its upward momentum on the back of strong performances by the cement, banking and the fertiliser sector.
Investor participation remained healthy throughout the week and averaged at 213 million shares traded, down 11% week-on-week. Meanwhile, foreign buying continued as foreigners were net buyers of $5.6 million worth of equity during the week.
The index witnessed no negative sessions throughout the week as and slowly inched towards the 13,000 point barrier, finally crossing it on Friday, when the index rose 1.1% with healthy volumes of 253 million shares traded.
The gains came despite some concerns about the CGT regime, as it was reported that the Federal Bureau of Revenue was insisting that declaring the source of income of investors be made compulsory at the bourse. However, this was debunked towards the end of the week by the Securities and Exchange Commission of Pakistan Chairman Muhammad Ali.
Negative news also came in the form of macro data, as the inflations numbers for February 2012 came in at 11%, on rising food and energy prices. The number is not expected to improve as the government further increased fuel prices in the beginning of March, and is expected to do the same in April, due to rising international oil prices.
However, investors remained undeterred and actively participated in the market. Heavy interest was witnessed in the cement sector, upon a healthy earnings outlook for the sector due to improved margins. The top three manufacturers, Lucky Cement, DG Khan Cement and Fauji Cement all rose by 6.9%, 9.5% and 20.3%, respectively, during the week.
The banking sector also performed impressively, as United Bank Limited rose 12.5% during the week in a follow up to its impressive result in the previous week. Bank Al-Falah and NIB Bank were also amongst the top performers of the bourse.
Not to be outdone, the fertilizer sector also impressed with Engro Corporation climbing by 7.1% after the announcement that gas supply to its new plant Enven will be restored by March 4. Fatima Fertilizer also rose 7.2% during the week. Engro’s new plant and Fatima’s plant have agreements with the government for gas supply at concessionary rates.
What to expect?
With the earnings season closing – only National Bank of Pakistan is scheduled to make an announcement on March 6 – the markets focus will shift to politics and clarity regarding the CGT regime. At the current high levels, a correction is also likely, and investors should trade cautiously at the market.
Renewed investor interest in oil and cement stocks on the first trading session of the week pushed the index to levels not seen since 2010.
The stock market closed flat as investors build new position by selling and accumulating stocks. National Bank of Pakistan was by far the top performer over expectations of better earnings.
The stock market jumped 139 points as news that Iran has offered to provide crude oil to Pakistan on deferred payments rose investor sentiments.
The stock market surged to cross the 12,900-point mark as investor sentiments rose on the back of trade list finalisation with India and continued foreign buying.
The stock market is climbing at its own pace but is now within touching distance of levels last seen before the 2008 financial crisis. Across the board rally helped the benchmark index cross the key 13,000-point barrier for the first time since June 2008.
Published in The Express Tribune, March 4th, 2012.