Healthy buying was witnessed at Karachi share market during the week ended on August 28, 2009 as a result of which the KSE-100 index surged by 433.28 points, or 5.3 percent, to close at 8,541 points against 8107.94 points. Despite negative news flow in terms of failure to reach an agreement on margin financing and surge in all T-bills yields, overall positive mood was witnessed at market.
The index crossed the 8,500 points levels on the back of strong interest of both forign and local investors. The main trigger for the market was Standard and Poor''s (S&P) revision of Pakistan''s credit ratings to ''B-'' which attracted interest from foreigners, who remained net buyers of shares worth $23.8 million, resultantly, average daily volumes improved to stand at 160 million shares, up 34.6 percent on weekly basis.
Bilal Qamar, an analyst at JS Global Capital said that the S&P raised its long term sovereign credit rating on Pakistan to ''B-'' from ''CCC+''. The decision came in after evaluating Pakistan ''s improving external liquidity coupled with reduction in external deficit due to successive disbursals from IMF and other multilateral loans. The news triggered a positive mood in the market which saw the local bourse rally by 179 points or 2.2 percent on Monday, alone.
He said that the market sentiment was dented after T-bill auction on Wednesday, which saw cut-off yields for all three papers rise by 22-103bps. The effect was only visible for a single trading session on Thursday but the market recovered consequently in the last trading session. 12-month yields came in at 12.44 percent (up 22bps), whereas 6 and 3-month T-bill yields stood at 12.55 percent (up 103bps) and 12.37 percent (up 96bps) respectively. Both papers were last accepted in the July 16 auction.
He said taht the foreigners continued their buying spree at the bourse, buying shares worth $41.2 million while selling shares worth $17.4 million, resulting in net buying of $23.8 million. So far in this fiscal year foreigners are net buyers of $83.3 million.
Muniba Saeed at Invest Capital and Securities said that the investor interest at the KSE remained highly stimulated as average daily volumes increased by a massive 35% WoW to a level of 160mn shares during the current week on the back of increased FIPI inflows witnessed during the week. The KSE100 index remained fairly active during the week, increasing by a significant 226pts on the last trading day. The market continued its downward trend since then with frequent bumps on the way.
The week remained highly eventful with S&P raising Pakistan ''s sovereign rating to B- on the back of improved external liquidity and reduced fiscal deficit. Also, the rating agency announced a stable outlook on the rating. On the negative side, IMF in a review of the country''s current situation termed the medium term outlook as fragile also due to which pressure prevailed in the market especially in the energy sector during the week as PSO reported to remain on the verge of default on its LCs for oil imports.