Market Watch: Stock market breaches key 14,000 points barrier; index at 4-year high

Benchmark KSE-100 index gains 147 points.

KARACHI: Bullish sentiments trumped uncertainty at the stock market on Monday, as the day saw the index close above the 14,000 point psychological barrier for the first time since May 16, 2008. The barrier had been tested sporadically last week – the index touched 14,000 points during intra-day trade last Friday – but weaker investor sentiment due to incessant uncertainty over the capital gains tax amnesty had prevented the market from closing above that level.

The KSE-100 index’s highest ever close – 15,767 points – was recorded in April 2008. Record high inflation in May of that year and subsequent State Bank policies to raise interest rates saw market capitalisation erode by around a third by August 2008.

Monday 23, 2012 is the first day since the crisis that the index has managed to close above the 14,000 points psychological barrier.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index surged 1.05% or 146.96 points to close at 14,083.44 points.

“Gains were mainly driven early on by news that the World Bank has allocated $1.8 billion for the country’s development projects, and the possibility that Pakistan may return to the IMF for additional funding. The higher close was helped by financials, as investors continue to bet on better banking earnings in first quarter results and beyond given improving asset quality. Bank Alfalah’s earnings, which grew by over 140% on a quarter-on-quarter basis, led the charge; with National Bank following. Among oil names, Pakistan State Oil earnings beat estimates, while a surprise cash payout did well to revive interest [in the sector]. Cements continued to perform, with Lucky Cement and DG Khan Cement (DGKC) closing higher on earnings optimism,” reported Faisal Bilwani, analyst at Elixir Securities.

“DGKC closed the day near its upper limit, as the fall in international coal prices should increase their margins,” added Shakir Padela, analyst at JS Global. DGKC rose 4.83% or Rs 2.36 to close at Rs44.71

Trade volumes were lower at 213.34 million shares compared with Friday’s tally of 244.21 million shares. The value of shares traded during the day was Rs5.37 billion.

Fauji Fertilizer Company was the volume leader with 23.44 million shares gaining 3.99% or Rs0.27 to finish at Rs7.04. It was followed by Bank Alfalah with 18.04 million shares gaining 3.92% or Rs0.66 to close at Rs17.49 and Jahangir Siddiqui Company with 13.99 million shares gaining 1.99% or Rs0.36 to close at Rs18.45.

Foreign institutional investors were net buyers of Rs42.21 million, according to data maintained by the National Clearing Company of Pakistan Limited.

Published in The Express Tribune, April 24^th, 2012.