The Karachi stock market during last week ending on December 10, 2006, remained in the positive as the benchmark KSE-100 Index gained 173 points, or 1.7 percent, on the back of favourable developments on the privatisation front, closing at 10,562 points from 10,388.19 points.
However, the suspension of trading in the shares of Callmate by the Securities and Exchange Commission of Pakistan (SECP) on the last trading day of the week kept the sentiment of the overall market unhurt, allowing the market to close the week with decent gains.
The Global Depository Receipts (GDRs) of the exploration sector giant, OGDC, and acquisition of Picic shares by a foreign investment group remained major issues during the week.
Average volume in the ready market improved to 172 million shares against 135 million shares of previous week.
After gaining 289 points in the first three sessions, the KSE-100 Index lost 115 points in the last two days.
Farhan Aziz, analyst at Jehangir Siddiqui Capital Markets, said that Oil and Gas Development Company (OGDC) share price recovery and Picic acquisition news by NIB Bank, owned by Tamasek Group of Singapore were the two major developments that directed the bourse through the week. The price of OGDC share, which went as low as Rs119 per share on Monday due to negative sentiment, due to lower-than-expected price of GDR, recovered and closed at Rs121.
This helped the Index to improve. The news of Picic acquisition by NIB Bank at Rs 82-83 per share generated investors' interest in the banking sector stocks having exposure in NIT units. As NIT holds 55 million shares of Picic, disposal of Picic lot would translate into capital gain of Rs 1.39-1.42 per unit of NIT. Besides, NIT would also have a cash inflow of Rs 4.5-4.6 billion, which would enhance its dividend payout ability. This would allow NIT to maintain its last year's highest ever dividend payout of Rs 5.8 per unit, thereby benefiting Bank of Punjab (BoP), National Bank of Pakistan (NBP), Faysal Bank Limited (FABL) and Bank of Khyber (BoK).
Khurram Ghufran, analyst at KASB Securities Limited said, said it was a mixed week at the bourses as the KSE-100 gained 173 points. Uncertainty clouded the beginning of the week amid the introduction of new risk management regime and speculation over the price of OGDC share.
However, no panic situation was witnessed, and the market gained 262 points over the next two days as OGDC held firm and activity picked up in banking and other sectors.
The bull-charge in banks was driven by MCB Bank, which found buyers due its attractive fundamentals.
Interest was also witnessed in Pakistan State Oil (PSO) as the schedule for its privatisation was announced. However, some profit taking was witnessed in on last two days as both oil and bank scrips cooled off slightly.
The week was rounded off with the news that SECP had suspended trading in Callmate shares for 60 days.
Going forward, Ghufran said the fertiliser sector was expected to remain in focus this week with the gas bidding for the new urea plant scheduled to take place on December 11, 2006.
Interest in the banking sector was also expected to persist, given the trend seen in the past few weeks. Looking further into the future, international oil prices, among other factors, would be an important determining factor for market direction.