Though the Karachi Stock Exchange (KSE) index last week recorded gain, but cautious approach from seasoned investors and volatile situation limit unprecedented increase where values stay above 10,000 levels.
The average trading volume during the week in the ready market stood at around 180 million shares, which is lower against the preceding week's 203 million shares.
The week of unnerving incidents has ended, leaving the city in dire geo-political situation. Throughout the week, the Index remained under pressure after the government's directions towards the former SECP chairman regarding March 2005 crisis. However, it started recovering in the latter part of the week after making a low of 9659, said an analyst from Atlas Capital Markets Ltd.
"Buy on rumours, sell on news" has proved somewhat correct as the NIT beneficiaries failed to pick up momentum after the announcement of its huge dividend payout. The NBP would get the "Best Foreign Bank" award and the MCB would receive the Euromoney award for the sixth time in seven years was not able to lift sentiments in the scrips.
International oil prices will touch all-time high of over $77 helped the oil and gas scrips to recover as well. The call of a three-day strike after the assassination of Allama Hassan Turabi, a central leader of the MMA on Friday, and India's hints at blaming Pakistan for the bombings in Mumbai commuter trains earlier this week bodes bad for the market. Nevertheless, with the results season arriving as well as market's ability to sustain the 10,000 level may help the index to recover. However, we still recommend investors to maintain a cautious approach.
Khurram Shehzad, research analyst from Investcapital Securities, said that after going through range-bound behaviour during the previous week, finally the KSE-100 found a breather last week.
The last trading session ended with a meagre, but positive gain of 12.21 points (0.12 percent) helping the KSE-100 close at 10,027 points.
The Index, while maintaining its upward trend for the last four days (excluding the first day of the week) ended with a net positive of 191 points on a weekend to weekend basis. The KSE-100, on the first day of the week, continued with the depressed sentiment following last week's gloomy behaviour to close with 332 points being in the negative zone. From the second day through the last day of the session week, KSE-100 surprisingly rebounded with positives of 152, 265, 94 and 12 points showing commencement of positive sentiment in the market.
KSE-100, yet again, let the market participants observe the breach of the psychological barrier of 10,000 points. There are a number of reasons witnessing this recovery.
First, international oil prices rallied amidst greater disturbance on the international political front. Secondly, the result season is now in close vicinity. The cement sector showed good strength in dispatches indicating better result expectations, and good results are also expected for other two main driving sectors, ie oil and banking. Finally, the gradual, but regular inflow of foreign investment on the back of attractive values lying with the market in general, and blue chip stocks in particular.
An analyst, from KASB Equities, said that with results season around the corner, we remain positive on the market as a whole. Though the market may face some pressure at current levels, we believe that the upcoming results will be enough to overcome any resistance that is encountered. Most scrips look attractive at current levels and as soon as the confusion related to the investigation of the March 2005 crisis is resolved, the better it will be. We have recently upgraded PTCL after our concerns about their management were allayed and our top picks include POL, FFBL, NBP, BoP, NML, ICI, Packages and DGKC.
Shehzad said the outlook for the future is buoyant as the KSE-100 may continue to climb as the result season gets closer. Foreign investors also find it attractive as the eye-catching values of the market outweighed the deteriorating political situation. A number of shares are trading at a discount to our fair values, and they can provide above average return to investors ahead. Our top picks are OGDC, PPL, NML, DGKC, PTC, and ICI.