KSE loses upward momentum

Last week saw the sentiments-driven Karachi stocks market remaining in a tight grip of investors' positive speculation about a significant rate-cut in Saturday's monetary policy announcement. The otherwise record-breaking KSE 100 index lost its upward momentum in the latter half of the week when the central bank hinted about its monetary intentions through keeping the rate of return on T-bills in the range of nine percent.
The benchmark index, however, added 0.77 percent to close at 34,026 points week-on-week (WoW). On average, daily traded volume slid by nine percent to stand at 302 million shares compared to 331 million of last week.
The net foreign inflows were recorded at $1.66 million as compared to the previous $17.63 million, down significantly by 91 percent.
With profit-taking witnessing a fresh high, fuel crisis also appeared as a major highlight for the week.
The investors, however, remained upbeat that the pro-business government would financially bail out the cash-strapped Pakistan State Oil, something that led to profit-taking in the energy stocks.
The Oil Marketing Companies sector remained green with HASCOL and PSO gaining 13.6 percent and six percent respectively.
K-Electric's stellar run at the bourse halted for the time period for receiving consent from majority shareholders to waive off their right on the proposed dividend lapsed on Thursday.
"Expected discount rate cut pushes the index in green," said analyst Abdul Azeem, adding the index surpassed the barrier of 34,000 points.
"Investors increased their holding of leveraged stocks," the analyst said. Azeem also sees Pakistan Tehreek-i-Insaaf's decision to postpone its likely street protest as a catalyst for the index.
Azeem said despite positive LSM figures, which grew 4.9 percent in Nov'14, the local bourse under performed on the last day of the week.
"Auto and textile sector remained in the limelight during the week as investors remain curious about the upcoming auto and textile policy," he said.
Raheel Ashraf of JS Research said the market remained volatile ahead of the SBP's monetary policy statement where the market participants were expecting a 50-100bps cut in the discount rate.
Other key highlights of the week were Bestway Cement announcing its intention to acquire 50 percent of the remaining free float of Lafarge Cement, 10.6 percent growth in cotton arrivals, 40 percent increase in broadband subscribers in 2014 and 18-28bps decline in T-bills cut-off yields.
Giving a neutral outlook, the analysts said the Saturday's monetary policy stance of the State Bank would decide the market sentiments going forward.
Further, they said, developments in the international oil prices could also affect the oil sector. "We expect correction in the market in upcoming week," said Azeem.