Weekly review: Market takes a breather as KSE-100 closes flat

Ongoing political situation and mixed corporate results kept investors sidelined.

KARACHI:

The stock market took a breather after an impressive two-week run as the benchmark KSE-100 index closed almost flat, shedding 29 points (0.1%) in the process, to end the week at 30,015.

The last two weeks had seen the index rack up 1,477 points (5.1%) as it recovered from the fallout of the political events that took place in August. The market’s impressive rally was, however, cut short as the anti-government protests again gained strength and floods wreaked havoc across the agricultural centres of the country.





Investors adopted a wait-and-see approach that was reflected in the KSE-100 index remaining range-bound throughout the week and trading in a range of 300 points. Furthermore, any gains the index witnessed in the banking and cement sectors were wiped out by losses in the heavyweight oil and gas sector.

Politics were again at the forefront this week as the protesting parties showed no signs of backing down from their demands. The crowds at the protests again started to swell up while the PTI chief Imran Khan announced that he would hold a protest in Karachi over the weekend.

At the same time, the country’s flooding situation continued to worsen as the floods hit the cities in lower Punjab and entered the Sindh province resulting in the displacement of thousands of people and massive damage to agricultural lands.

The current political scenario also resulted in the International Monetary Fund ruling out the release of the fifth tranche of the standby arrangement as the government failed to implement the necessary reforms. The country’s foreign exchange reserves, however, broke the declining trend and posted a modest gain of $110 million, to climb to $13.5 billion according to the latest State Bank figures.

Foreign buying was another bright spot at the bourse this week as foreigners bought a net of $13.2 million worth of equity during the week, taking September’s net buying past the $50-million figure. A point of concern was that the number was down from the $18.7 million buying in the previous week.

On the corporate front, the banking and cement sectors were the star performers of the week. The banking sector was led by Habib Bank Limited and United Bank Limited which both rose 7.1% and 3.1% respectively. While the cement sector’s star performers were Lafarge Cement (up 10%) and Lucky Cement (up 5.9%).

The gains were offset by losses in the oil and gas sector, which was impacted by a global decline in oil prices and rumours of OGDC’s upcoming secondary offering being prices at a significant discount to the market price of the company. OGDC, PPL and POL were down 4.1%, 1.4% and 3% during the week.



Average trading volumes rose 25.3% and stood at 163.7 million shares traded per day, while average daily values increased by only 10.8% and were recorded at Rs7.76 billion per day. The KSE’s market capitalisation dropped to Rs6.99 trillion at the end of the week.

Published in The Express Tribune, September 21^st, 2014.

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