The share prices remained range-bound with lower trading volumes on the Karachi Sock Exchange (KSE) as most of the seasoned investors stayed away from the rings because of lack of support from financial institutions and want of some positive news from the privatisation sector.
The KSE index only managed to show a nominal gain of 15 points or 0.3 percent during the course of the week. However, the badla statistics during the week showed upward movement as leveraged positions increased.
It for the third time in last three months has crossed the 4900 mark, where the selling-pressure and the profit-taking activity kept the market from crossing the 5,000 points. But it appeared that 5,000 barrier is intact. The index tried to make a new high, but slipped back as there was no positive development to consolidate.
Overall, the index closed at 4915.08 at the end of Friday's session as compared with 4900.43 a week ago. This translates into a 0.3 percent gain on week-on-week basis. The market generally saw small movements throughout the week with the biggest move in absolute terms of 26.37 points decline on Wednesday.
Several punters and day traders were of the opinion that small range-bound movements are a natural consequence of the lack of news that can drive the market in a particular direction. Moreover, volumes remained low throughout the week, and are expected to decline further during the coming trading sessions.
As indicated above, the barrier seems intact, and it appears unlikely that the index will cross the 5,000 points mark without the backing of strong positive news, despite the fact that it would take less than two percentage gain over Friday's closing of 4915.08 to do so.
Thus in the current week the index is likely to continue its range-bound movements. The lack of news from either the corporate or the political front is expected to further strengthen this trend.
Overall the most significant factor likely to impact the market during the coming trading sessions is the Pakistan-India cricket tournament. The volumes are expected to decline considerably with a number of punters shifting their focus on the cricket matches rather than the local bourses. These low volumes should further ensure the maintenance of range-bound trading in the market during the week.
On Monday, the market closed up by 17.46 points to 4917.89 after having gone to a new intra-day high of 4947.63. Traders and dealers have said recently that the market will not find it easy to break out at these high levels, and trading with caution is a must.
The PTC again traded up to a rate of Rs 40.30, but failed to consolidate its gains and closed up only 10 paisa at Rs 39.85. Punters were positive on the stock, but would caution that a medium-term view is required, and anyone trying to trade intra-day should keep strict stop losses.
The rumour of top management level change at PTC was doing the rounds during the day. The rumour was confirmed after trading hours, and a news report confirmed the appointment of Zafar A. Khan as the chairman and Junaid I. Khan as the chief executive of PTCL. Volumes in Hubco remain low as most players prefer to stay out of the stock and instead focus on PTC.
The index was slightly down as investors chose to stay away from the market today. PTCL, OGDC and Adamjee Insurance all three which were up yesterday came under pressure. We still think PTCL is one stock which has tremendous potential to lead the market from these levels, but historically, PTCL's behaviour has been like this.
When one expects it to move up it delays its upward stride for a while thus leaving a bad taste in the mouth.
Some get fed up and disposed of while others remain patient to see the virtue. It does move up, but takes its own time, hence our advice to our valued customers is to hold on to PTCL.
High volumes in both Maple Leaf and DG Khan Cement are showing positive signs for the sector in general. We also saw an increased activity in the lower caps cement stocks such as Dandot Cement (up Rs 1.50 - limit up) and Saadi Cement (up 50 paisa).
The cement prices have moved up in the market, and its quota has been increased to 83 percent for the week by the cement cartel, which is having a positive impact in the stock prices. We believe one should remain overweight in the sector.
The cement sector was again in the limelight as out of the top five volumes leaders, four were cement scrips. DG Khan, Maple Leaf, Lucky and Saadi during the week depicted appreciable gains.
Traders were quite bullish on the cement sector and recommended their investors to accumulate top picks namely, Maple and DG Khan. It is also worth having a small position in Pioneer and Pakland Cement as they are in the south where there has been robust demand growth.
The market on Friday moved up by 11.2 points to close at 4915 on a day that was ruled by the cement sector. Lucky Cement closed limit up at Rs 28.95 and Maple closed up 4.2 percent on hefty volumes. Both stocks have set new highs, and technically speaking they are expected to continue this move upwards.
DG Khan was up by 1.2 percent on volumes of 51.5 million shares. It should be the next one to show strong performance, as it relatively under performed the other cement scrips last week.
The smaller cap cement stocks also showed excellent performance with Saadi up by 6.9 percent, Pakland up by 6.8 percent and Pioneer Cement up by 3.1 percent. Traders at Elixir Securities continued to remain extremely bullish on the cement sector although we have been recommending partial profit-taking on all positions due to the high index levels.
The market expects the KSE to decide on a relaxation in exposure requirements in the current week, and one of the reasons for the cement sector move was that the change in rules would benefit players in the cement sector in terms of reduced cost.
We would, however, wait for volumes to pick up in the broader market to be bullish on the market as a whole.