Discount rate optimism and foreign buying provide boost to market.
The stock market registered an increase for the fourth consecutive week as expectations of a discount rate cut and return of foreign buying resulted in the benchmark KSE-100 index gaining another 461 points (1.4%) to close at a new all-time high of 33,786.
The KSE-100 index closed positive in four of the five trading days with trading volumes picking up considerably towards the latter half of the week. It seemed poised to shatter the 34,000-point barrier on Friday before profit-taking kicked in and restricted it to 33,786 points at the end of trading.
The latest gains meant that the index has climbed 2,774 points (8.9%) in the last 30 days in an impressive rally which has pushed the index to new highs. Investors are optimistic that the State Bank will reduce the discount rate by 100 basis points in its monetary policy announcement on January 24, which will fuel the next round of the market’s growth.
With inflation numbers for the previous months clocking in well below 5%, it is inevitable that the central bank will slash the discount rate. The question now remains if it will be a 50 basis point cut or a 100 basis point cut. Investors feel confident that it will be the latter and, as a result, have invested heavily in the market.
With the discount rate expected to come down, yield plays took the spotlight at the bourse with the Hub Power Company leading the way with a 4.6% gain during the week. Similarly, Fauji Fertilizer Company, another popular yield play, also rose 2.2% during the week.
Investors also breathed a sigh of relief as foreigners returned to the bourse with a bang and were net buyers of $17.6 million worth of equity during the week.
Foreigners had turned into net sellers for the past several weeks and the return to buying ways was a welcome change for local participants.
Macro data for the first six months of the current fiscal year was also revealed during the week and provided mixed signals for the market as the country’s remittances rose to $8.98 billion (up 15% year-on-year) while the country’s trade deficit also rose to $12.13 billion (up 33.97% year-on-year).
In sector specific news, the banking sector took the limelight as investors anticipate good payouts when banks announce their earnings for 2014. The sector contributed 210 points to the index, with MCB leading the way with a gain of 4.8%, while UBL also rose 3.5% during the week.
On the other hand, the oil sector suffered a torrid week with global crude oil prices hitting new lows and dropping below $50 per barrel. The sector’s losses resulted in the KSE-100 index falling 228 points with the OGDC, PPL and POL all witnessing sharp drops.
Average trading volumes rose 12.2% and stood at 331.5 million shares traded per day. While average daily values fell slightly and stood at Rs14.8 billion daily. The Karachi Stock Exchange’s market capitalisation stood at Rs.7.71 trillion ($ 76.4 billion) at the end of the week.
Winners of the week
Pakistan Cables Limited
Pakistan Cables Limited manufactures and distributes copper rods, wires, cables and conductors, aluminium profiles and anodised fabrications.
Shifa International Hospitals Limited
Shifa International Hospitals Limited establishes and runs medical centers and hospitals in Pakistan. The company’s clinical services include medicaine, pediatrics, surgical, obstetrics and gynecology, dentistry, rehabilitation services and ophthalmology. Shifa also provides diagnostic services including specialised diagnostics, radiology and clinical laboratory.
Arif Habib Corporation
Arif Habib Corporation Limited is a holding company. The company holds interests in the securities brokerage, investment and financial advisory, investment management, commercial banking, commodities, private equity, cement and fertiliser industries.
Losers of the week
Pakistan Telecommunication Company Limited
Pakistan Telecommunication Company Limited provides fixed line domestic and international telephone services, telex, telegraph, fax and leased circuit services in Pakistan. The company owns all public exchanges, the nationwide network of local telephone lines, principal long distance transmission facilities and international telephone gateways in Pakistan.
Pakistan Petroleum Limited
Pakistan Petroleum Limited specialises in the exploration and production of crude oil and natural gas. The company also sells liquefied petroleum gas and condensates.
Oil and Gas Development Company
Oil and Gas Development Company Limited explores and develops oil and natural gas properties in Pakistan.
Published in The Express Tribune, January 18th, 2015.
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1719053250-0/BeFunky-collage-(5)1719053250-0-270x192.webp "non solar consumers bear rs200b burden")
We are used to such surges which normally and mysteriously coincide with a national crisis. Personal friendship comes handy and Ishaq Dar will soon tell the nation about 'successful' policy of his samadhi that led to this.Never mind the Petrol disaster. Stock Brokers are merely returning the favour.