Mixed trend was witnessed at the Karachi share market during the week ended on March 14, 2009 as the investors opted cautious stance due to uncertainty on political front in the country. KSE-100 index closed at 5,750.47 points level, up by only 2.37 points.
Trading activities remained dull, and the average daily volume at the ready counter declined to 76.255 million shares, or 26.4 percent, as compared to previous weeks 103.67 million shares.
Market capitalisation declined by Rs 22 billion to Rs 1.760 trillion. The outflow of foreign portfolio investment continued as the offshore investors withdrew $1.1 million during the week.
On Monday, the market opened under pressure due to political uncertainty and the index lost 86.08 points to close at 5,662.02 points. On Tuesday, the market remained closed on account of Eid Milad-un-Nabi. On Wednesday, selling pressure continued and the index declined by 104.10 points to close at 5,557.92 points.
On Thursday, the market took upward trend and the index recovered 149.17 points to close at 5,707.09 points. On Friday, the market witnessed a volatile session. However, it managed to close in positive at 5,750.47 points with a net gain of 43.38 points.
Atif Zafar, an analyst at JS Global Capital, said that despite KIBOR dropping to a 10-month low and T-bill yield falling by more than 100bps, average daily volume continue to remain under pressure during the week amid political uncertainty. "Though political situation remained unclear, positive developments continued on the economic front as 6-month KIBOR fell to a 10-month low of 12.4 percent", he said. So far in 2009, benchmark lending rate is down 326bps while it has fallen by 57bps since March 1, 2009. Moreover, in the T-bill auction cut off yield declined by 92-120bps. However, market seems to discount these positive developments amid ongoing political uncertainty.
Romessa Mirza at Invest Capital and Securities said that the result season has almost worn off and investors can do little but sit with fingers crossed, in anticipation that the government will come up with a solution to the prevailing political incongruities. Average volume this week was among the lowest since the turn of the new calendar year, declining by 26 percent, falling to 76 million shares. Volume leaders of the week were NIB, JSCL, UBL, OGDC, FFBL, BAFL, and NBP, accounting for 10.7 percent, 7.0 percent, 5.3 percent, 4.4 percent, 3.9 percent, 3.8 percent, and 3.8 percent of total volume.
On the positive front, trade deficit for the eight months of FY09 declined by 7 percent on year-on-year basis while that of February-09 fell by a substantial 27 percent on monthly basis. Though forex reserves declined by $90 million in the week ending 7th March, the commitment of over $4 billion from ADB and the positive statements by the SBP governor regarding Pakistans ability to meet its forex reserve targets, coupled with the encouraging remittances figures, uplifted spirits. Moreover, the lower T-Bill cut-off encouraged investors to take fresh positions, while others took positions in hopes of institutional support to the market. However, CPI figures of February-09 showed a bit of a reversal as inflation stood at 21.07 percent on yearly basis.