The stock market entered recovery mode after five straight weeks of decline as the improving political situation resulted in the KSE-100 index climbing 946 points (3.3%) to close at 29,513 during the week ended September 5.
The benchmark index shed a cumulative 1,746 points since the start of August as tension between the ruling PML-N and the opposition Pakistan Tehreek-e-Insaf (PTI) came to a head.
Investors remained on the edge throughout the saga, with the KSE-100 index fluctuating wildly during trading sessions, as fears of the assemblies being dissolved or a military coup taking place remain at the back of their minds.
However, the protestors’ decision to storm the parliament late last week resulted in an unprecedented show of support for the government from all political parties who united to condemn the protestors and reiterate that the country’s fragile democracy would not be allowed to fail.
At the same time, the country’s military also announced that they would not ask the prime minister to resign and assuaged investors who feared a military coup taking place. Investors reacted positively to these developments as the index shot up 766 points on Tuesday alone.
The positive momentum continued in the following days, before the index receded a little due to the news of the Chinese premier putting off his visit to Pakistan in which several major investment deals were expected to be completed.
With the political situation improving, foreigners also actively participated in the market and bought a net of $18.65 million worth of equity during the week, more than double the $8.5 million net buying in the previous week.
Strong corporate earnings also aided the index with the cement sector taking the limelight after Lucky Cement, the country’s largest cement manufacturer, announced better-than-expected earnings resulting in a 11% gain in its share price during the week. The heavyweight Oil and Gas sector also contributed to the rally as shares like OGDC and POL recovered losses witnessed in the previous month.
Macroeconomic indicators also played a role in the market’s performance as inflation numbers for the month of August clocked in at 6.99% as compared to 7.88% in July, prompting optimism among investors about a potential discount rate cut in the monetary policy announcement later in the month.
Despite the index’s strong performance, the country’s declining foreign exchange reserves and the falling value of the Pakistani rupee against the US dollar were a cause of concern for investors and will be monitored closely moving forwards.
Average trading volumes shot up 48% and stood at 176 million shares traded per day, while average daily value was recorded at Rs9.38 billion, up 48% over the previous week. The KSE’s market capitalisation stood at Rs6.94 trillion at the end of the week.
Winners of the week
Jahangir Siddiqui and Company
Jahangir Siddiqui and Company Limited is an investment company, offering share brokerage, money market, advisory and consultancy, underwriting and portfolio management services.
NetSol Technology
NetSol Technologies Limited provides information technology solutions and services. The company’s services include custom software development, technology outsourcing, systems integration, application development, and business intelligence consulting.
Dawood Hercules
Dawood Hercules Corporation Limited produces urea fertilisers. The company also produces anhydrous ammonia for manufacturers of soda ash, fructose, and other chemicals.
Losers of the week
National Foods
National Foods Limited is a diversified food manufacturer. The group’s products include recipe blends, dehydrated vegetables, pickles, salts, snack foods, desserts, and a number of kinds of health foods.
Pakistan Cables
Pakistan Cables Limited manufactures and distributes copper rods, wires, cables and conductors, aluminum profiles and anodised fabrications.
Shezan International
Shezan International Limited manufactures and sells juices, beverages, pickles, preserves, and flavourings which are all derived from fresh fruits and vegetables.
Published in The Express Tribune, September 7th, 2014.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
1719053250-0/BeFunky-collage-(5)1719053250-0-270x192.webp "non solar consumers bear rs200b burden")
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ