The KSE-100 index gained 28.17 points to close at 9,037.30 points level during the week ended on December 12, 2009 on the back of improved sentiment after Moody's positive report for Pakistan and stable outlook.
"The local bourse opened in the backdrop of terrorist activities over the weekend which continued in the first two days of the week", analysts said. However, sentiment improved after Moody's Investor Service in its annual sovereign report elaborated on its reasons for giving Pakistan a B3 rating and a stable outlook, positive inflow on Manzalai production and increased remittances flow in November 2009 helped the index to close positive, they added.
Buying rally continued in the second-tier stocks with PAKRI, PAEL, NCL and BAFL all posting gains on healthy volumes. Investor interest remained intact in BoP due to development in the recovery of bad loans. However, cements, refineries and telecom companies underperformed.
Trading remained low with average daily volume of 97.385 million shares as compared to previous week's 97.442 million shares. Market capitalisation increased slightly by Rs 4 billion to Rs 2.613 trillion.
The NBFCs and foreigners emerged as net sellers of $6.3 million and $0.6 million respectively. Banks, mutual funds and companies remained net buyers with a cumulative net inflow of $8.3 million.
On Monday, the market opened under pressure due to security concerns and the index lost 16.21 points to close at 8,992.92 points level with volume of 72.763 million shares. On Tuesday, negative trend continued and the index declined by 148.96 points to close at 8,843.96 points level with 99.036 million shares trading.
On Wednesday, the situation improved on the back of investors' interest on dips and the index recovered 61.47 points to close at 8,905.43 points level with 79.772 million shares. On Thursday, the index gained 93.96 points to close at 8,999.39 points, with 118.912 million shares trading. Moody's positive report on country's rating helped the index to surge by 37.91 points to close at 9,037.30 points level with 116.439 million shares on Friday.
Rabia Tariq, analyst at JS Global Capital, said that Moody's country report on Pakistan stated that the country's economic slowdown was phasing out, as external liquidity situation had improved and macro economic imbalances were on their way to recovery as well. However, risks like sensitive political scenario, deteriorating security situation and structural problems in the power sector put extra pressure on the country's economic footing. Moody's report along with increase in oil and gas production from Manzalai and November 2009 remittances data (up 20 percent) restored investor confidence and nullified the dampening affect of CPI recorded at 10.5 percent for November 2009.
Nauman Khan at Invest Capital Securities said that the week kick-started with the series of ill-fated events of Peshawar and Lahore. This rattled the confidence of local investors, which already were on the doldrums regarding the outcome of the NRO saga. Furthermore, the impact on the bourse was even more profound with the dearth of the foreign interest as the benchmark KSE-100 lost 165 points in the first two trading sessions of the week to close at 8,844 points.
However, at that stage the attractive levels lured the investors back in the market, pushing the index back above the psychological level of 9,000. Overall, the index, registered a minuscule change of 0.31 percent on week-on-week basis (28.17 points), to close the week at 9,037 points, whereas average daily turnover continued to remain stagnant compared to that of last week at 97 million shares. However, bifurcation of the volume also depicted a contrasting picture, where the first three sessions' volumes were a mere 83 million shares on average against turnover of average 118 million shares of last two days.