Performance remains dull

For the second consecutive week the Karachi share market witnessed a dull performance amid political uncertainly in the country and the benchmark KSE-100 index closed below 30,000 level end of the last week. The benchmark KSE-100 index shed 310 points (WoW) to close at 29,706 points as on Sept 26, 2014 points compared to 30,016 points a week earlier. Average traded volumes also dipped by 5 per cent WoW as the majority of interest witnessed in second and third tier stocks.
Despite negative sentiments, the average daily value witnessed an upward trend and surged by 8 per cent to Rs 8.37 billion compared to Rs 7.76 billion a week earlier. The average daily volume fell by 5.5 per cent to 155 million shares during the last week against 164 million shares in the previous week. Following the bearish trend, the market capitalisation declined by Rs 78 billion to reach Rs 6.920 trillion down from Rs 6.998 trillion.
An analyst at JS said that the KSE performance was remained dull during the week following no change in policy rate by the State Bank of Pakistan (SBP) over the weekend and the President of Pakistan promulgating GIDC ordinance during the week.
With overhang of political uncertainty and deterioration of law and order situation in Karachi, the benchmark index KSE-100 closed the week with 1 per cent (WoW) down, he added.
"Automobile and pharmaceutical sectors extended their bullish trend from last week, led by the anticipation of favourable policy changes ahead," he said.
The outgoing week also saw the IPO of Engro Powergen Qadirpur Limited (EPQL). While Current Account deficit rising to $1.37 billion in the first two months of FY15, textile exports declining by 5.2 per cent YoY to $2.17 billion in FY15, the LSM posting growth of 1.14 per cent YoY in July-2014 and the Petroleum Minister announcing no gas for industries and CNG stations during the winter season were some other key highlights of the week.
"The market may not get strength. Upcoming Eid festival will also keep the investors sidelined," he said.
The KASB in its weekly research report said that escalation in the uncertainty over the law and order situation may keep investors on the sidelines and market will keenly follow developments on the OGDC transaction in the coming weeks.
The government's plan to raise around Rs84 billion ($816 million) with the sale of its 7.5 per cent stakes in the OGDCL, the much-awaited and largest offer in eight years, stoked cautiousness, it added.
According to analysts, large deal size led to a very cautious stance on the script by the investors, which also remained a key drag on the overall market performance.
Talking about the market outlook, they are also expecting a lackluster trend during the next week because of the religious festivity just a week ahead. The lack of positive triggers and almost end of quarterly results in October may also constrain the upward movement, they added.
Among five trading session of the week, the market was bullish for one session, while the rest four posted negative trend.
Resisting for few sessions, the benchmark KSE-100 index closed below the 30,000 psychological mark on Monday in the absence of any market related triggers. The KSE-100 index lost 22 points to close at 29,994 points compared to 30,016 points in the previous session.
On Tuesday, the market showed some recovery and the benchmark KSE-100 index gained 150 points to close above the 30,000 mark. KSE-100 index on the second trading of the week closed at 30,144 points.
After a bullish session, the Karachi share market on Wednesday closed lower and the benchmark KSE-100 index lost 48 points to close 30,095 points.
On Thursday, sentiments at the Karachi share market remained negative aimed induced selling pressure followed by political unrest in the city. The market opened on a positive note however deteriorating law and order situation in Karachi shaped selling pressure and finally the KSE-100 index closed at 29,940 points, declined by 156 points.
The Karachi share market remained volatile on last trading day of the week and the benchmark KSE-100 index lost further 235 points to close at 29,706 points on Friday.
Analysts said that President Mamnoon Hussain signed the Gas Infrastructure Development Cess (GIDC) Ordinance 2014 for promulgation, to collect the budgeted Rs145 billion for the current fiscal year. Previously, on 22 August 2014 a three-judge bench of Chief Justice Nasirul Mulk declared GIDC as a fee and not a tax.
The ordinance was also promulgated to provide a legal cover to the recovery of the amount, which has already been collected by the federal government through GIDC from consumers. Failure to collect GIDC was one of the factors that led to inconclusive mandatory 4th Review of the Pakistan economy under $6.64 billion Extended Fund Facility (EFF) by the IMF staff level mission.