Karachi share market remained highly volatile during the week ended on April 10, 2009 mainly due to SECP decision to discontinue CFS Mk-II and increase in T-bill yield. However, CPI inflation falling to 11 months low boosted the market on the last trading day and the KSE-100 index closed at 7,617.96 points level, with a net gain of 185.08 points.
A major feature of the week was surge in volume amid strong interest of both local and foreign investors as average daily volumes at ready counter surged by 35.8 percent to 399.879 million shares as compared to previous weeks 294.569 million shares.
After a gap of 15 weeks, the offshore investors were net buyers during the week, as they bought shares worth $15.1 million, while shares amounting to $12.1 million were offloaded, resulting in net buying of $3 million.
On Monday, the market started on a positive note and the index increased by 86.05 points to close at the level of 7,518.93 points with a volume of 382.184 million shares.
On Tuesday, the positive trend continued and the index gained 116.95 points to close at 7,635.88 points with 478.944 million shares.
However, on Wednesday, the expected increase in T-bill yield and announcement discontinuation of CFS Mk-II invited panic selling and the index declined by 295.58 points to close at 7,340.30 points with 493.090 million shares.
On Thursday, the market witnessed a volatile session and the index closed at 7,295.98 points with a net loss of 44.32 points with 372.239 million shares.
On Friday, the market witnessed healthy buying due to strong interest of local and foreign investors and the index surged by 321.98 points to close at 7,617.96 points with 272.940 million shares.
Atif Zafar at JS Global Capital said that the market lost its momentum amid SECP decision to discontinue CFS Mk-II without a replacement product. Moreover, a 92-104bps hike in T-bill cut-off yields in the latest auction and profit taking after a sustained rally put further pressure on the market. However, the market rallied on the last trading session on the back of falling CPI inflation to 11 months low. A persistent fall in CPI is expected to pave the way for a possible decrease in discount rate by the central bank in future.
Saad Arshad at Invest Capital and Securities said that rise in trading volume was all the more impressive despite the SECP directive to discontinue CFS Mk-II from April 18, 2009 and Futures from April 20, 2009. The recent Rs 70 billion T-bill issue, however, dampened the market sentiment as the 1-year cut-off yield came to 13.49 percent, significantly higher than market expectations.