The Karachi share market witnessed bullish trend during the week ended August 16, 2012 on the back of SBP''s decision to cut the discount rate by150bps. The benchmark KSE-100 index surged by 238.59 points and closed above 15,000 psychological level at 15,000.08 points, the highest level since April 30, 2008.
Trading activity also improved significantly as the average daily volumes increased by 157.6 percent to 155.20 million shares as compared to previous week''s average of 60.25 million shares. Total market capitalisation increased by Rs 60 billion to Rs 3.827 trillion.
Foreign investors remained net buyers of shares worth $35.6 million during the week (inflated by one-off $30m COLG transaction). It was a three-day week as the market remained closed on Tuesday, August 14 and Friday, August 17 on account of Independence Day and Jumma-tul-Wida.
The market opened on strong positive note on Monday, August 13, 2012 and the index increased by 150.48 points to close at 14,911.97 points with total volumes of 195.084 million shares. The index gained another 58.96 points on Wednesday, August 15, 2012 and closed at 14,970.93 points with 173.780 million shares. This trend continued and the index surged by another 29.15 points to close the week at 15,000.08 points with 96.743 million shares.
Furqan Ayub, an analyst at JS Global Capital said the investor sentiment at the KSE turned positive after the SBP''s decision to cut the discount rate by 150bps against market''s expectation of a 50-100bps rate cut. The buoyant mood of the market drove the KSE-100 Index pass the 15,000 level for the first time since April 30, 2008. On a week-on-week basis, the KSE-100 index gained 1.6 percent to close at 15,000.
With June 2012 result season still going on, specific stocks remained in the limelight following their results, he said. He said the macro indicators showed a mixed trend as trade deficit (increase by 4.77 percent on yearly basis and foreign direct investment (down by 50 percent) portrayed a weak picture, while remittances (up by 9.9 percent) remained among the few bright spots on the macro landscape.
In the first PIB auction after the discount rate cut, cut-off yields decreased by up to 137bps taking their cue from the SBP''s 150bps rate cut to 10.5 percent. Cut off rates for 3-, 5- and 10-year PIB are now at 11.30 percent, 11.70 percent and 12.05 percent, respectively.
KESC, Colgate Palmolive, Media Times Limited, Bata (Pakistan) and International Steel Limited were the major gainers while Soneri Bank, United Bank Limited, Shell Pakistan, Tri-Pack Films and Dawood Corporation were major losers in the benchmark KSE-100 this week. Muhammad Rizwan at Topline Securities said relative calmness on the political front, signs of further improvement in Pak-US relationship coupled with above expectation cut in the discount rate created positive vibes amongst the investors. He said major activity was witnessed in cement stock while KESC also remained in the lime light.