Despite continuous interest of foreign investors, the Karachi share market witnessed declining trend during the week ended on August 6, 2010 due to selling by local participants. The KSE-100 index declined by 203.82 points and closed at 10,315.20 points.
Trading also remained low and the average daily volume at ready counter declined by 22.4 percent to 61.91 million shares as compared to previous week''s 79.80 million shares. Market capitalisation declined by Rs 54 billion to Rs 2.894 trillion. Foreign investors, however, remained net buyers of shares worth $15 million.
On Monday, the market opened on a negative note due to increase in interest rates, and the index declined by 145.49 points to close at 10,373.53 points with a volume of 79.508 million shares. On Tuesday, the index recovered 15.11 points to close at 10,388.64 points level with 45.731 million shares. On Wednesday, the index gained 1.63 points and closed at 10,390.27 points level with 72.553 million shares.
On Thursday, due to continuous selling by local investors the index declined by 38.55 points and closed at the level of 10,351.72 points with 55.742 million shares. On Friday, the index lost 36.52 points and closed at 10,315.20 points level with 55.994 million shares. Saeed Khalid, analyst at Invest Capital and Securities, said that the index was surrounded by negative factors during the week. The foremost factor that influenced the investors to shy away from trading was the increase in discount rate by the central bank by 50bps. Affecting both, the decline witnessed in the KSE-100 and the shrinking average daily volumes (down by a notable 22 percent to 61.9 million shares/day) were the violent terrorist activities in the city. On the stock front, the fertiliser sector was unable to perform despite registering a massive rise in sector''s profitability during first half of FY10. On the foreign side FIPI marked a significant increase of 19 percent, rising to $15 million compared to the level of $12.7 million in the previous week.
Sana Hanfi at JS Global Capital said that following the SBP''s unexpected decision to raise the discount rate to 13 percent, the local bourse opened on a negative note and remained under pressure throughout the week. Even the result announcements of big tickets such as MCB, PPL and PSO could do little to attract investor interest in the market. The mood was further hurt by news of flood inundation in the upper parts of the country. Oil and Gas sector saw a decline of 1.3 percent based on the news that production from certain fields has been suspended due to flood seepage issues. Law and order situation also worsened in the city which translated into low volumes.