Market watch: Cooled-off political temperature gives breathing space

Benchmark KSE-100 index jumps 311 points.

KARACHI: Mercifully for investors, political temperatures cooled-off as the government and Dr Tahirul Qadri reached an agreement late Thursday night. The local bourse’s jubilation was evident in a ‘relief rally’ during the shortened session on Friday.

Trading hours were amended with an extending morning session, the market closed at half past noon due to the security situation in the city.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index jumped 1.91% or 310.68 points to end at the 16,601.77 point level. Trade volumes improved to 182 million shares compared with Thursday’s tally of 145 million shares.

“The equity market recovered sharply to gain nearly 2% on a short trading day following the end to the five-day sit-in by protestors,” reported Harris Batla, analyst at Elixir Securities.

Much improved confidence was evident with small and mid cap stocks, while Fauji Cement led the volumes charts on earnings excitement.

Shares of 317 companies were traded on the final trading session of the week. At the end of the day 275 stocks closed higher, 38 declined while four remained unchanged. The value of shares traded during the day was Rs4 billion.

Strong earnings outlook and current account (CA) surplus played the role of a catalyst in bullish stocks across the board amid hopes for positive Pakistan and international Monetary Fund talks on fresh loans, said Ahsan Mehanti, analyst at Arif Habib Corporation.

The CA registered a surplus of $697 million in December 2012, mainly on the back of $688 million received on December 28 in foreign inflows under the Coalition Support Fund, taking the surplus balance to $250 million for the first half of fiscal 2013. However, analysts expect the CA may head back into the red zone in the coming months as the country has to pay back $545 million to the IMF in February 2013.

Fauji Cement was the volume leader with 42.2 million shares gaining Rs0.50 to finish at Rs7.39. It was followed by Maple Leaf Cement with 15.5 million shares climbing Re1 to close at Rs15.67 and Byco Petroleum with 13.5 million shares rising Rs0.63 to close at Rs13.9.

Foreign institutional investors were net sellers of Rs109 million, according to data maintained by the National Clearing Company of Pakistan Limited.

Analysts expect the market to remain buoyant in the coming week as earnings and fundamentals come back into play after much improved
political climate.

Published in The Express Tribune, January 19^th, 2013.

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