KSE buoyed by upbeat final two days, gains 2.2 per cent

Stocks at the Karachi Stock Exchange managed to post gains amidst lacklustre participation from investors.

KARACHI: Stocks at the Karachi Stock Exchange (KSE) managed to post gains amidst lacklustre participation from investors. Interest in select equities, especially in the last two trading sessions of the week helped the benchmark KSE-100 index gain 2.2 per cent or 218 points. The buying interest helped buoy the index above 10,260 points, marking a three-month high. The index moved within a narrow range during this period, establishing a high at 10,311 points.

During the week, dull activity was witnessed on the first two days of trading. However, volumes surged to an average of 141 million shares in the last two sessions. This helped bolster average volumes for the outgoing week at 92 million shares, an improvement of 30 per cent as compared to the previous week. Lakson Tobacco, NIB Bank, Pakistan Telephone, Bank AlFalah and KASB Bank were major gainers during the outgoing week, while Pakistan Cables, Shifa International, Bata Pakistan, Grays of Cambridge and Pakistan Services were major losers at KSE.

InvestCap analyst Saeed Khalid commented that concessions on European Union import tariffs on Pakistani goods helped investors’ sentiments while “stillness on the political front” was also encouraging to prospective buyers. However, he pointed out that “activity is still skewed towards only 8 scrips”. These, he said, are “inexpensive scrips, indicative of liquidity concerns still prevailing in the market”. Khalid pointed out that 52 per cent of the total turnover was attributable to eight equities.

Analysts attributed improved volumes to relatively better performance of textile companies, based on results announced during the outgoing week. They also highlighted that foreign portfolio investments continued to flow into equity markets during the week. “The benchmark index may see further gains next week along with consolidation,” commented BMA technical analyst Nurali Barkatali, adding that “resistance between 10400 and 10550 will likely be tested in upcoming sessions”. Experts predict that rising cotton prices could ignite demand for raw material and divert attention towards companies providing inputs to the textile sector.

“The most important trigger this week was Nato’s apology for the attack inside Pakistani territory,” said Arif Habib Investments Director Ehsan Mehanti. “The diplomatic advances show encouraging signs of support for the country and those have a positive impact on the overall outlook,” he added. Mehanti also asserted that there are expectations that the much-awaited leverage product will be introduced into the market next month and that the International Monetary Fund will provide $1.7 billion to the country on a priority basis.

A weekly synopsis report published by KASB Securities asserted that trading activity during the next week will closely trail “development on NRO cases” and “CPI data”. KASB analysts advised investors to “adopt a cherry-picking approach”. Other experts are also advising limited exposure to stocks that yield relatively high dividends for upcoming sessions.

Published in The Express Tribune, October 10^th, 2010.