KSE posted seven percent gain in Ramazan for last 10 years

The KSE has posted an average gain of 7 percent in the month of Ramazan for the last 10 years. In the holy month of Ramazan, expected from August 12, the trading timings at Karachi bourse have been cut down to 4 hours 45 minutes from normal 6 hours. Interestingly in last 10 years the equity market has shown some positive trend in this holy month of Ramazan whereas trading remains on the lower side both in terms of volumes and values.
It is a coincidence that the market has gained in all 9 years. The year 2008 has been excluded from this analysis due to imposition of price floor. Interestingly, every year market has showed positive trend while the highest return was recorded last year (2009) when KSE posted 18 percent return (16 percent in US $).
"The major reason behind exceptional performance was upward revision of Pakistan's credit rating by S&P after the IMF loan which resulted in record foreign buying", Farhan Mahmood, an analyst at Topline Securities said. "This time we may expect some improvement as the market has already corrected by 5 percent in last 6 trading sessions amid concern that floods will have impact on economy, interest rate and corporate earnings", he added.
On the flip side, trading activity remains on the lower side in the month of Ramazan mainly due to restricted trading timings. In last 10 years, volumes during the holy month of Ramazan fell on an average by 9-10 percent from the preceding month. This time also some decline in volumes cannot be ruled out although the last month volume of 69 million (Rs 2.7 billion) a day is already too low, he said.
He said besides the repercussion of floods, one of the key events to drive the stock market this time is the outcome of the IMF board meeting, which is scheduled in the last week of August. While the major focus would be on the smooth implementation of reformed GST, the impact of the recent floods on the economy and budgetary consequences could be a part of the main agenda, he added. "We believe market will continue to react on the news flow pertaining to the recent floods and its impact on the economy", he said.