Following sell-off in global markets, Karachi Stock Exchange witnessed downtrend throughout the week. With a decline of 843.29 points, the KSE-100 Index closed at 21,698.35 against previous 22,541.64 points. Weekly average volume also remained under pressure and with a decrease of 13.3 percent, it stood at 321.89 million shares against 371.44 million shares a week earlier. The market capitalisation also followed suit and fell by 3.4 percent to close at Rs5.275 trillion from Rs5.459 trillion.
Average daily value also decreased by 7.8 percent to close at Rs9.34 billion against previous Rs10.13 billion. Commenting on the market performance, Samar Iqbal, a technical analyst at Topline Securities said that global selling in equity markets and confusion over next two months monetary policy stance forced the market to decline by 4 percent on week on week basis.
She said that volume in rupee terms also declined by 13 percent to Rs 9 billion. Heavy selling in heavyweights - Oil and MCB also kept pressure on the index. On the other hand, decline in coal prices and increase in cement bag prices kept investors interest alive in cement stocks.
However, she added that news flow of withdrawal of gas subsidy for fertilizer plants affected fertilizer stocks. During the week, visit of IMF generated indications that Pakistan may get new loan that will help to overcome balance of payment problems.
Going forward, after 50bps cut in policy rate renewed interest would be seen in leveraged companies. The IMF related developments and budget approval would be the key highlights of the coming week, Samar said.
Furqan Ayub, a technical analyst at JS Global commented that local bourse remained jittery throughout the week as euphoria related to the federal budget subsided somewhat while uncertainty ahead of the Monetary Policy Statement (MPS) weighted down the investor sentiment.
Resultantly, he added that KSE-100 shed 843 points (3.7 percent WoW) to close at 21,698 level. Average volumes traded in the market plunged by 13 percent WoW to 322 million shares. The SBP did unveil its Monetary Policy Statement for the next two months on Friday (after market hours) where it cut the discount rate by 50bps to 9 percent, he said.
Key news highlights during the week: May 2013 CAD registered at US $356 million: CAD in May 2013 clocked in at US $356mn vis-à-vis US $455mn deficit in April 2013. Resultantly, YTD FY13 CAD stands at US $1.95bn vis-à-vis US $3.92bn deficit in the same period last year. Note that YoY stronger numbers are largely a function of Coalition Support Fund (CSF) payments amounting to US $1.81bn. Excluding the CSF, CAD would surge to US $3.76bn.
Textile export amount to US $11.9 billion in 11 MFY13: Cumulative textile exports witnessed a growth of 5.3 percent YoY and 5.5 percent MoM to US $1.2bn in May. Resultantly, 11MFY13 exports amounted to US $11.9bn, up 6.0 percent YoY. The key reasons behind the steady growth were higher demand for yarn from China and higher exports to the European market following the preferential market access for 75 products.
The IMF loan likely by early September: Media reports this week suggested that the IMF expressed satisfaction over the budgetary measures taken by the government. Moreover, news reports also suggested that Pakistan is likely to get a US $5bn loan from IMF by the first week of September. Note that the IMF delegation is in Pakistan to meet the Finance Minister Ishaq Dar and his team.
PPL discovers gas in Gambat South: This week Pakistan Petroleum Limited (PPL) announced a gas discovery in Gambat South block, located in district Khairpur Mir''s, Sindh. PPL has 65 percent working interest in the field and as per JS estimate the positive annualized impact for PPL is of Rs0.7/share. This news flow triggered interest in the stock as it outperformed the market by 1.5 percent.
Universal top performers during the week were United Bank, Engro Foods, Nishat (Chunian), Fauji Cement, Bank Al-Falah, Habib Bank Ltd, Kot Addu Power, Pakistan Oilfields, Lucky Cement and Pakistan State Oil.
The KSE witnessed a decline of 325.18 points on the first day of new week Monday due to profit-taking in various sectors. The KSE-100 index closed at 22,216.46 points against 22,541.64 points on last trading day (Friday). Bears took control of the floor on Tuesday. With a decline of 296.83 points, the KSE-100 index closed at 21,919.63 against 22,216.46 points a day earlier.
After correction for two days in a row, bulls succeeded to take charge at KSE on Wednesday. With a rise of 216.09 points, the KSE-100 share index closed at 22,135.72 level against last 21,919.63 points.
Bears defeated bulls on Thursday and the local bourse again witnessed correction due to profit-taking. With a decline of 120.68 points, the KSE-100 share index closed at 22,015.04 against 22,135.72 points a day earlier.
On Friday, Karachi shares market again witnessed correction of 316.69 points and the index closed at 21,698.35 points against previous 22,015.04 points.
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