Bearish sentiment prevailed at the Karachi Stock Exchange during the last week, ending November 28, amid political tension. During the last week, the benchmark KSE-100 index was down by 0.9 per cent or 297 points (WoW) to close at 31,198 points compared to 31,495 points a week earlier. The average daily traded volume during the week was 209 million shares, depicting a decrease of 19pc WoW. During the period under review, market capitalisation posted a fall of Rs670 billion to Rs7.152 trillion down from Rs7.288 trillion.
"The political situation was shaky in the country following PTI rally in Islamabad and increasing tension between government and PTI made the investors cautious during the last week," said an analyst at InvestCap, Abdul Azeem.
He said that investors at the Karachi stock market witnessed mixed feeling during the ending week and recent developments in the country affected the index and returns.
"The political tension and less enthusiastic developments in the economy also restricted foreign inflows and made investors dull during the week which is clearly depicted in figures of average volumes and net inflows. The net foreign outflows during the week were $4.47 million as compared to last week's inflows of $4.81 million", he added.
In addition, the hapless growth in Large Scale Manufacturing (LSM) sector also suppressed investor sentiments early in the week. While, market participants have yet to recover from the awe due to halting of trading activities by a major brokerage house, Azeem said. The global oil prices are facing downward trajectory, affecting the revenues of oil sector in Pakistan. The decrease in share prices of oil companies (sector with highest weight in index) has dragged the index to red, he noted.
Talking about the outlook, Azeem said that the overwhelming response to Sukuk bond has paved the way for IMF's tranche of $1.1 billion in December 2014.
In addition to this lower inflation projection in November '14 will provide cushion for further monetary easing. The above factors will also keep balance of payment favourable going forward. However, political protest of PTI on November 30 might negatively affect the next week index performance, he opined.
Another analyst at JS, Raheel Ashraf, said that negative sentiment prevailed at the KSE during the outgoing week, as investors remained concerned ahead of a key political gathering in the federal capital. Meanwhile, heavy-weight oil sector took a battering on tumbling international oil prices as OPEC decided not to cut their oil output, he added.
During the last week, Pakistan also re-entered the international Sukuk market after a gap of nine years, accepting bids of one billion dollar (vs. bids amounting to $2.3 billion), for an issue initially placed at $500 million, he pointed out.
CCoP's approval for transaction structure for divestment in Allied Bank Limited (ABL), textile exports clocking in 2pc YoY lower in 4MFY15, some 14 YoY and 2pc MoM decline in urea sales in October-2014 and some 47-50bps fall in T-bills cut-off yields were some other key highlights of the outgoing week, Ashraf said.
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