KSE in grip of bearish spell

The share market last week remained in the grip of bearish spell as investors mostly squared their positions ahead of Eid holidays and less number of sessions left to trade and rumours that Etisalat would extend payment date.
With just four sessions in the week, mixed sentiment gripped the KSE after a bearish spell. The week's highlights were some major corporate result announcements. The index closed down 90 points, or 1.1 percent, to 8319 level. Average volume traded over the week declined by 15 percent to 254 million shares compared to 297 million of previous week. Average weekly turnover also shrunk to $467 million, 15 percent down from previous week's $548 million.
After smashing 6.1 percent down preceding week, the index rebounded on Monday on the back of heavy buying in cement and oil companies, closing up 1.4 percent at 8408 level. With the introduction of November counters, futures positions had leveraged to some extent, providing liquidity in the market. Cement sector's upside was mainly due to its planned growth in production from 18 million tons per annum to over 30 millon tons per annum in the next four years.
Moreover, the impact of earthquake also continued. Lucky Cement increase in production by 2000 tons a day led to its upper circuit at Rs 68.55. DGKC, MLCF, FCCL and DCL all closed on their upper circuits.
In the banking sector, rumours of renewed foreign buying in MCB and NBP led them to close on their upper circuits. In the oil sector, PSO closed on its upper cap while POL gained 4 percent to close at Rs 411.75.
Without any CFS session, the market opened on a positive note on Tuesday, gaining 0.9 percent. But it could not sustain above the 8450 level, and plunged 1.1 percent to 8316 level at the close. Volatility prevailed on the back of banking and oil-related stocks.
The downward trend prevailed in the market on Wednesday, due to the settlement of October counters. The index closed down 0.98 percent at 8235 level. The market opened on a positive note making an intra-day high of 0.5percent (40 points) but could not sustain that level and plunged down 2.4 percent (200 points) on the back of some negative rumours regarding PTCL privatisation delay, pushing the stock down 4.9 percent to Rs 60.00. Rumours of the final date for settlement on PTCL issue also renewed interest in PTCL.
Results poured in all through the week, with some above expectations and others below expectations. Cement companies on average reported above average results, while banks reported earnings inline with expectations. PTCL also reported earnings, which were very close to expectations, while Nishat Chunian reported below expected earnings. Some results were still in the process of being published as KSE was closed on Friday and Saturday, and will open on Monday.
Fahad Majid Hasan, research analyst from Alfalah Securities, said that with hardly two trading sessions left this week, "we expect the market to remain lacklustre". Although the recent corporate announcements are expected to create positive sentiment, a lot would depend on PTCL.
Tariq Hussain Khan, research analyst at Atlas Investment Bank, said the main reason attributable to volatility was the final week of all major corporate financial result announcements and the notorious issue regarding the sale of PTCL to Etisalat. Earnings of almost all companies were in line with market expectations. Judging from the trend of the market, a short to medium-term range set at the KSE-100 Index is 8250-8750.
"Therefore, with the results season now over, we expect the market to remain range-bound with relatively less volatility. However, any unprecedented major fundamental change cannot be ruled out, which can result in the market to escape the expected range."
Waleed Mohsin, research analyst from KASB Equities, said that the PTCL issue is going to dictate the market sentiment. "With Eid holidays around the corner and only a few trading sessions remaining, we believe that market activity would be limited and the market could remain under pressure. We advise our investors to go long in fundamentally strong scrips. We recommend a buy on Azgard Nine, Chenab Ltd, Fauji Bin Qasim, Kapco, ICI Pakistan, Nishat Chunian, Nishat Mills, Packages, and POL."