Despite security concerns, the KSE-100 index surged by 313.48 points, or 3.3 percent, during the week ended on October 10, 2009 from 9,455.11 points to 9,768.63 points due to strong interest of foreign investors.
A fresh inflow of $32.6 million of foreign portfolio investment was recorded at the local equity market during the week. Market capitalisation increased by Rs 91 billion to Rs 2.835 trillion. Average trading volumes at the ready counter, however, declined by 10.3 percent to 279 million shares against previous week''s average of 311 million shares.
On Monday, the market opened on a positive note and the index hit 9,562.34 points intra-day high. However, the terrorists attack on the UN Health office in Islamabad dampened investors'' confidence and the index closed at 9,487.95 points with a gain of 32.80 points, with a volume of 230.415 million shares.
On Tuesday, the investors'' confidence revived on the back of approval of leveraged products by KSE board and the index surged by 155.16 points to 9,643.11 points with 265.623 million shares. On Wednesday, the market witnessed another bullish session and the index gained 193.39 points to close at 9,836.50 points, with 341.060 million shares trading.
On Thursday, the market opened on a positive note and the index hit 13-month high at 9,936.32 points. However, the investors opted for profit taking after mid-session due to security concerns and the index closed at 9,740.87 points with a loss of 95.63 points, with 316.582 million shares transactions.
On Friday, amid mixed trend the index closed at 9,768.63 points with a gain of 27.76 points and trading of 239.669 million shares.
Khurram Schehzad at Invest Capital Securities said that the week remained jittery due to deteriorating law and order situation as a couple of bomb blasts--one being of a high-scale--were seen in two major cities of the country. However, despite rising security concerns, the market headed its northward trend. Trading activity however, witnessed a slowdown. He said that the foreign players remained buoyant as the week saw another chunk of net inflow of $32.5 million. "Major negative development besides the law and order deterioration was Pakistan Army''s stance on the notoriously talked about Kerry-Lugar Bill and its possible impact on country''s sovereignty", he added.
On the other hand, major positives included rising oil prices, which kept oil scrips in the limelight throughout the week coupled with Moody''s statement to keep Pakistan''s outlook under the ''Stable'' zone. Country''s forex reserves improved a little further sending positive signals to investor coupled with government''s plan to launch a $500 million Eurobond.
Bilal Qamar at JS Global Capital said with the psychological level of 10,000 in sights on Friday, positive market sentiments proved short-lived due to deteriorating law and order situation and bomb blast in Peshawar city.
He said that the Kerry-Lugar Bill has been under criticism by both civil and military leadership in Pakistan. The objections were broadly related to the clauses about the country''s nuclear program, support for cross border militancy and government''s role to military promotions. Hence, President Obama delayed the signing of the bill which dampened market sentiments to some extent. The bill awaits an outcome after the discussion in the National Assembly.
Foreigners remained on the buying side in the outgoing week as they bought shares worth $45.6 million and sold shares worth $13.0 million, resulting in net buying of $32.6 million. Cumulative foreigner''s portfolio shows that the offshore investors have turned net buyers for the first time in this calendar year with net buying worth $1.6 million; down from a peak outflow of $292.3 million in June 2009. For the calendar year 2008, foreigners were net sellers of shares worth $443 million. In the outgoing week, companies and individuals were net sellers of shares worth $25.4 million and $15.5 million, respectively, while mutual funds were net sellers of shares worth $8.4 million.