Market watch: Oil sector fuels bourse to breach 17,500-level

Benchmark KSE-100 index climbs 71 points as earnings season guides direction.

KARACHI: The index-heavyweight oil and gas sector fuelled the Karachi bourse to breach the psychological level of 17,500 points. Earnings season sensation drove the rally despite the State Bank of Pakistan raising concerns over the country’s macroeconomic health in its monetary policy announcement last Friday in which it maintained the interest rates at 9.5%.

Although around 600 companies are listed on the exchange, less than 10% of them see regular trading. Top companies include state-run oil and gas companies, banking companies and a few textile companies.

Both the oil and gas companies and the textile industry are benefiting from the rupee’s depreciation against the dollar. The energy companies post their profits in dollars, and textile exporters find the rupee’s slide makes their wares more competitively priced internationally.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index rose 0.4% or 70.6 points to end at 17,548.54 point level. Trade volumes improved to 278 million shares compared with Friday’s tally of 269 million shares.

“The stock market maintained its upward trend as on Monday the index was led by the Oil and Gas Development Company (OGDC),” reported Samar Iqbal, equity dealer at Topline Securities.

“With oil prices up nearly 4% in the last two weeks, the oil sector recorded decent volumes as investors expect OGDC to announce healthy earnings for the previous quarter,” said Jawwad Aboobakar, analyst at Elixir Securities. The OGDC stock rose Rs3.26 to close at Rs198.75 during yesterday’s trade.

Nishat Chunian closed at its upper limit and Nishat Mills attracted buying over exceptional growth in revenues due to weakening rupee.

The value of shares traded during the day was Rs6.55 billion.

Jahangir Siddiqui and Company (JSCL) was the volume leader with 25.5 million shares losing Rs0.26 to finish at Rs17.78. It was followed by Maple Leaf Cement with 24.49 million shares gaining Rs0.75 to close at Rs18.05 and Pakistan Telecommunication Company with 17.28 million shares losing Rs0.13 to close at Rs19.87 as investors opted to book profits at current levels of above the price Rs20 per share.

JSCL and Maple Leaf Cement jumped onto the volume charts indicating persistent retail participation in the stocks. Whereas, lower than expected results of DG Khan Cement caused its share price to drop drastically.

Foreign institutional investors were net buyers of Rs257.57 million ($2.63 million), according to data maintained by the National Clearing Company of Pakistan Limited.

Published in The Express Tribune, February 12^th, 2013.

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