Index loses 47.35 points

Despite continuous support by foreign investors, the KSE-100 index lost 47.35 points and closed the week ending on February 4, 2011 at 12,415.35 points due to selling mainly by local participants. The average daily volume at ready counter improved slightly to 117.52 million shares against previous week's 117.25 million shares. Market capitalisation declined by Rs 14 billion to Rs 3.355 trillion.
Foreign investors were net buyers of shares worth $6.1 million, while companies stood as major net sellers of $11.6 million during the week.
The market opened on a positive note on Monday. However, after mid-session investors opted to offload their holdings. The index declined by 103.34 points to close at 12,359.36 points with volume of 121.348 million shares.
The trend continued on Tuesday and the index lost 85.98 points to close at 12,273.38 points with 132.737 million shares.
On Wednesday, the index declined by 30.99 points and closed at 12,242.39 points with 78.396 million shares.
On Thursday, the situation improved due to investors' revived interest on low levels and index registered a recovery of 116.67 points to close at 12,359.06 points with 123.393 million shares.
On Friday, the index gained 56.29 points and closed at 12,415.35 points with 131.717 million shares.
Asad Siddiqui, an analyst at Invest Capital and Securities, said that the week began on a positive note, as two days earlier the SBP had decided against increasing the discount rate and kept it constant at 14 percent. This development was positively received by the shares market as during the first trading session the index reached its intra-day high of 12,613 points. From there onwards, the market took a nosedive, and the index closed at the level of 12,359 points upon negative sentiment arising from refinery sector. Following day, bearish trend continued as the market further discounted itself by 86 points. On Wednesday the index went down by another 31 points, on the back of selling by local investors. Investors' confidence was somewhat restored later during the week on the expectation of leverage product, which is expected to be reintroduced in the market by 21st February-11. This positive trend continued on Friday, as the market went up by another 53 points and closed at the level of 12,415 points, down by one percent.
Sana Hanif at JS Global Capital said though SBP kept discount rate unchanged at 14 percent last weekend (contrary to market expectations), the KSE remained under pressure during the first three trading sessions of the week led by pre-emptive selling by local investors amid the Egyptian political crisis. However, market sentiments improved in the later part of the week on encouraging macro and political news, in addition to the upcoming result announcements.
The SBP announced its 4th MPS for FY11, where it opted to keep policy rate intact at 14 percent. The central bank highlighted decline in government borrowing, surplus current account balance in the first half of FY11 and optimism on the fiscal front as key reasons behind the decision. However, at the same time, it raised inflation expectation to 15-16 percent, and stressed the need to limit fiscal slippages.
Refineries' price performance remained under pressure throughout, and closed -0.3 percent on week-on-week basis on news of possible reduction in deemed duty on HSD from the current 7.5 percent. Some key corporate results were announced this week with Lucky Cement announcing below consensus 1HFY11 earnings of Rs 4.52/share, resulting in a 3.2 percent week-on-week drop in its market cap. Looking ahead, result announcements of MCB, ABL and PSO next week could dictate market sentiments.