KSE index may hit 37,000-point level by December: analysts

Currently volatile though, the equity analysts expect the Karachi share market to cross the 37,000 points psychological barrier by December this year. With the conclusion of July (2015), the country's largest bourse emerged as a record-breaking portfolio investment destination. On July 24, the trading turnover at the ready-counter was recorded at 783 million shares. This, Topline analyst Mohammad Rizwan recalled, was a high last seen about 10 years back in March 2005.
Also, the KSE-100 index was seen hitting its all-time intraday high of 36,111 points on July 22. "Pakistan equities continued its bull-run into the uncharted territory with record high volumes in July'15," viewed researchers at Taurus Securities, a subsidiary of National Bank of Pakistan.
Persisting with a bullish trend, KSE-100 index gained 1343 points to close at 35,741.52 during the just-concluded month. Cumulatively, in 7MCY15, the index posted a return of 11.2 percent, 9.8 percent in dollar terms. This, market observers said, was despite increased foreign outflows that accumulated to net selling of $21.3 million. Daily trading activity improved by 37 percent MoM, 300 percent YoY, to 447 million on average. However, Taurus analysts said, volumes growth did not translate into the value as the average rupee-traded value increased by only 12 percent MoM, 150 percent YoY.
This they attributed to concentration of high volumes in the third-tier penny stocks. "Major chuck of the activity remained skewed towards second- and third-tier stocks," observed Syed Atif Zafar at JS Research.
Macros were more positives than negatives, he said. However, Atif warned, recent floods may raise some alarm bells going forward as they could potentially shave 0.5 percent off from FY16 GDP growth. "Our re-rating theme for... equity markets remains intact (at) over 35 percent discount to regional peers," the analyst said. During the month under review, researchers at Taurus Securities said, the central bank maintained key interest rate at a target price of 6.5 percent which brought fresh interest in the banking stocks.
Further, they said, the government's "strength" on political issues also rejuvenated after the judgement of Judicial Commission against Pakistan Tehreek-i-Insaf vote rigging allegations. "In next few months, upcoming corporate results would drive the market," the analysts said showing optimism that positives like favourable economic fundamentals, improved business sentiments and expected 10 percent corporate profitability growth would keep the KSE-100 index on the growth trajectory. "We maintain our target of 37,000 index levels by December 15," they said.