Bearish trend persists

Bearish trend was witnessed at the Karachi share market during the week ended on December 4, 2011 due to investors' concerns over Pak-US relations, and KSE-100 index declined by 275.93 points to close at 11,372.21 points. Trading, however, improved as the average daily volume increased to 37.13 million shares, or 7.96 percent, as compared to previous week's 34.40 million shares.
Market capitalisation declined by Rs 71 billion to Rs 2.961 trillion. Foreign investors remained net sellers of shares worth $2.3 million as compared to an outflow of $3.8 million of previous week. On Monday, the market opened in deep red and the index declined by 153.99 points to close at 11,494.15 points with volume of 46.243 million shares. Late buying on Tuesday supported the index to recover 12.80 points to close at 11,506.95 points with 37.386 million shares.
On Wednesday, the index gained 25.88 points to close at 11,532.83 points with 38.491 million shares. On Thursday, the index surged by 24.54 points to close at 11,557.37 points with 27.472 million shares. On Friday, the investors opted for selling and the index declined by 185.16 points to close the week at 11,372.21 points with 36.050 million shares.
Yawar Uz Zaman, an analyst at InvestCap said that the disturbance following the US-Nato strike on Pak borders kept tensions up on local equities frontage and the benchmark KSE-100 index remained depressed throughout the week, followed by volumes being at multi-year low.
The index lost 276 points on account of stark future prospects of the Pak-US ties following the attack. Equity market took severe battering especially after the US decision to suspend Pak military aid with no intention to leave the specified airbase in Pak. Thus, last day of trading was worst of the week where market witnessed a loss of 185 points.
The SBP announced the MPS for (December-January) FY12 in which policy rate remained unchanged at 12 percent owing to expected hike in inflation in the upcoming months accompanied by worsening of balance of payments of the country that can further cause rupee to depreciate against dollar. The rupee also lost 1.39 percent of its worth and touched new high of Rs 89.02/dollar in the interbank market, while FX reserves eased a bit to $16.88 billion.
However, average traded volumes went up by 7.96 percent to 37 million shares due to low base of previous week, while average traded value surge by 1.57 percent to $25 million. Furqan Ayub at JS Global Capital said that weak investors' sentiment prevailed at the local bourse as the killing of Pakistani forces by Nato strikes further strained an already complex US-Pak relationship.
On the macro economic front, SBP's decision to keep the discount rate (DR) on hold also kept investors activity under check as the KSE-100 Index closed at 11,372 points, declining 276 points, down 2.4 percent on week-on-week basis. In comparison to the regional markets, the index under-performed by 7.2 percent.