The Karachi Stock Exchange (KSE) for the seventh consecutive week closed on a positive note mainly because of fresh buying erupted in patches and cautiously in cement, banks and oil group despite lack of positive news from the privatisation front.
The KSE-100 index at the end of Friday ended at 9432, up 205 points or 2.2 percent from 9226 at the end of last week, and depicted a 1142 points or 13.8 percent increase since October 21, 2005. This was the highest level of index in last eight and half months and previously this level was seen on March 18, 2005.
Abrar Hussain, research analyst from Atlas Investment Bank, said the market climbed on four out of five occasions with minor intra-day corrections on the back of profit-taking by investors at inflated levels. The market players may take their strides as the SECP's announcements made last week regarding a non-member chairman for the KSE.
News regarding the privatisation of NIT was a major morale booster for market sentiments.
To date, the vulnerability remaining in the market is that of the deal to be made by the Government of Pakistan and Etisalat over the various demands made by the UAE telecom firm with regards the sale of PTCL.
"We feel the market has entered an overbought zone and, therefore, recommend investors to trade cautiously and book-profits whenever accrued", he said.
Volumes were generally higher this week as trading volumes increased by 17 percent as compared to last week with the average volumes increasing from 381.6 million shares to 447.6 million shares. An increase in average trading value was also visible with the average turnover increasing from $552 million to $640 million (up 16 percent).
Omar Ehthisham, research analyst at Alfalah Securities, said that with the index above the 9400 level and rising open interest in futures (Rs 16 billion) the market appears to be on shaky footing. "We advise a cautious approach with our top pick as POL, PPL and OGDC. With the expected meeting of OPEC on the coming Monday and the arrival of strong winter season in North America we expect a rise in international oil prices and hence our strong interest in the oil and gas sector", he maintained
The overall sentiment at the KSE remained positive especially after the last week concluded on a high. The daily volumes hovered around the 500 million figure except for Friday, where the volumes were lower at 383 million. Considerable activity was seen in the top tier stocks after a recent period where the investors' interest had shifted towards second and third tier stocks. Activity in the cement and banking sector provided a boost to the market.
Waleed Mohsin, research analyst at KASB Equities, said the market would remain range-bound next week, and remain sensitive to news regarding KSE chairmanship and any directives on the CFS issue.
Oil fluctuations will dictate the performance of the oil and gas sector and can influence the market direction.
"We are selectively positive on the market and recommend investors to go long in Pakistan Oilfields, Fauji Fertiliser Bin Qasim, Nishat Mills, and Azgard Nine. From a dividend yield perspective, Kapco looks attractive", Waleed Mohsin suggested.