Market watch: KSE on a rollercoaster ride as election fever ends

Despite volatility, benchmark KSE-100 index adds 92 points .

KARACHI: The Karachi bourse witnessed a rollercoaster session yesterday before finally surrendering to bullish sentiments and closing in the black. The stock market has climbed 651 points since Monday, exhibiting a showcase of confidence of foreigners in the newly-elected Pakistan Muslim League – Nawaz’s leadership.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index climbed 0.45% or 92.07 points to end at the 20,566.69 point level. Trade volumes jumped to a two-year high, clocking in at 419 million shares compared with Tuesday’s tally of 300 million shares.

The index opened on a positive note, but failed to sustain the aggressive upward momentum as heavy profit-taking was witnessed by local institutions. However, in the late session, the market recovered from an intraday low of 20,348 points as foreign buying broke the selling momentum, reported Fahad Ali, analyst at JS Global Capital.

Accumulation was observed in stocks with high dividend yields and cheap multiples. Energy, oil marketing companies, power and banking sectors remained in the limelight as investors believe that the new government’s first agenda will be to address the circular debt, which will result in better cash flows for either directly or indirectly related sectors.

On the other hand, the banking sector, particularly MCB Bank, has been on a roll as the newly elected government is expected to approach the International Monetary Fund for a bailout programme due to which investors expect the government to nudge the interest rates up.

Shares of 396 companies were traded on Wednesday. At the end of the day 186 stocks closed higher, 168 declined while 42 remained unchanged. The value of shares traded during the day was Rs12.12 billion.

Sibtain Mustafa of Elixir Securities believes that key economic and political decisions in the coming months including the budget, IMF talks, formation of government in Khyber-Pakhtunkhwa and Sindh will dominate sentiments.

Bank of Punjab was the volume leader with 34.64 million shares gaining Rs0.49 to finish at Rs11.8. It was followed by Karachi Electric Supply Company with 27.76 million shares gaining Rs0.8 to close at Rs6.26 and Japan Power – a power producer – with 27.21 million shares climbing Re1 to close at Rs3.02.

Foreign institutional investors were net buyers of Rs857 million, according to data maintained by the National Clearing Company of Pakistan.

Published in The Express Tribune, May 16^th, 2013.

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