Market watch: Political noise keeps activity muted

Benchmark KSE-100 index ends virtually flat.

KARACHI: The local bourse closed virtually flat amid uncertainty over the outcome of the long march for electoral reforms in Islamabad, protests in Karachi over the killing of Hazara Shias and the government’s decision to sack the chief minister of Balochistan.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index fell a meagre 0.01% or 1.53 points to end at 16,633.18 point level. Activity remained thin as volumes fell to a paltry level of 88 million shares compared with Friday’s tally of 116 million shares.

“Investors remained confused about the ongoing political situation in the country,” said Samar Iqbal, analyst at Topline Securities.

The market hit an intraday low of 16,514, down 121 points, however it recovered after successful talks between the protesters and the government, closing flat, reported Fahad Ali, analyst at JS Global Capital.

Shares of 328 companies were traded on the first trading session of the week. At the end of the day 124 stocks closed higher, 132 declined while 72 remained unchanged. The value of shares traded during the day was Rs1.69 billion.

“Investors were on the sidelines waiting for the events to unfold and the situation would be much worse if it was not for Fauji Cement that traded roughly half of the traded volume on the board,” said Faisal Bilwani, analyst at Elixir Securities. The small cap cement play was witnessing renewed interest as foreigners buy on earnings’ optimism driven by volumetric growth.

Fauji Cement was the volume leader with 31.32 million shares gaining Rs0.30 to finish at Rs7.04. It was followed by TRG Pakistan with 11.53 million shares gaining Rs0.77 to close at Rs5.98 and Byco Petroleum with 3.88 million shares losing Rs0.09 to close at Rs13.14.

Foreign institutional investors were net buyers of Rs96.3 million, according to data maintained by the National Clearing Company of Pakistan Limited.

Going forward, expect investors to incline towards highly selective cherry picking earnings and payout plays as political situation spoils the party. Analysts see heightened volatility in days ahead with volumes confined in small and mid capitalised cement and textile stocks.

Published in The Express Tribune, January 15^th, 2013.

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