Investors' participation remained extremely low during the last week of 2011, ended on December 30 due to concerns over capital gains tax, 'memogate' controversy, and shortage of gas supply to manufacturing sector. However, despite foreign selling, local investors' interest was seen in some select stocks.
That supported the KSE-100 index to register a gain of 46.57 points, or 0.4 percent, through the week, to close at 11,347.66 points. Trading remained very low and average daily volume at ready counter declined by 15.3 percent to 38.06 million shares as compared to previous week's 44.93 million shares.
Market capitalisation increased by Rs 15 billion to 2.945 trillion.
Foreign investors remained mostly inactive, due to Christmas and New Year holidays, being net sellers of $0.4 million.
On Monday, the market opened on a positive note and the index gained 9.26 points to close at 11,310.35 level with trading of 17.561 million shares.
On Tuesday, dullness prevailed and the index inched up by a mere 1.03 points to close at 11,311.38 points with 19.577 million shares.
On Wednesday, the market witnessed positive trend and the index increased by 41.21 points to close at 11,352.59 points with 46.028 million shares.
On Thursday, the index gained 83.08 points to close at 11,435.67 points with 44.561 million shares.
On Friday, last trading session of the year, investors opted for profit taking and the index declined by 88.01 points and closed at 11,347.66 level with 62.569 million shares.
Naveed Tehsin, an analyst at JS Global Capital, said that the week started off with extremely low volumes amid issues pertaining to capital gains tax (CGT), 'memogate' controversy, and gas supply to the manufacturing sector particularly the fertilizer industry.
Adding to the misery of the fertilizer sector, poor offtake numbers in November further dampened investor sentiment. As a result, average volume was down by 15 percent to 38 million shares. However, the KSE-100 Index witnessed a gain of 47 points, up 0.4 on week-on-week basis.
The gas crisis in the country is worsening with the winter setting in. In order to rationalise the gas use, the government is considering proposals regarding month-long closure of CNG stations and raising CNG prices. Moreover, the government has finalised the increase in gas tariff for different consumers from 14 percent to 207 percent from January 2012 which is likely to negatively impact the margins of the manufacturing sectors.
All fertilizer sales in November were down 11 percent on month-on-month basis, whereas both urea and DAP offtake dropped by 12 percent and 22 percent respectively. Consequently, the fertilizer stocks like FFC, Engro, FFBL and Fatima under-performed the market by 3 percent, 6 percent, 10 percent and 1 percent respectively.
The large scale manufacturing (LSM) grew by 2.1 percent on year-on-year basis in the four months of FY12 mainly due to the low base effect as floods last year had affected the industrial production. In October alone, however, the LSM contracted by 1.5 percent. Furthermore, foreign direct investment (FDI) fell by 27 percent on year-on-year basis in the five months of FY12 to $419.8 million.