KSE climbs 1.3pc WoW, fur­ther bet­ter­ment ex­pected

The Pak Banker - - COMPANIES/BOSS -

Asad Fa­rooq

Af­ter a volatile week, the Karachi Stock Ex­change gained 351 points at the cul­mi­na­tion of the week and fur­ther bet­ter­ment is also ex­pected in near fu­ture, due to bet­ter po­lit­i­cal and eco­nomic sce­nario. The bench­mark KSE-100 shares in­dex moved 1.3 per­cent week on week up­wards to be closed at 27116.13 points.

Dur­ing the week, aver­age daily trad­ing vol­ume of shares traded re­mained 154 mil­lion shares, against 188.87 mil­lion aver­age daily shares traded dur­ing the pre­vi­ous week, show­ing a de­cline of 18.5 per­cent WoW ba­sis.

Sim­i­larly value of aver­age shares traded daily clocked in at Rs 7.5 bil­lion, as com­pared to value of aver­age shares traded dur­ing pre­ced­ing week of Rs 8.38 bil­lion, show­ing a de­crease of 10.3 per­cent WoW. The mar­ket cap­i­tal­iza­tion how­ever in­creased by 1.7 per­cent WoW from Rs 6.46 tril­lion to Rs 7.5 tril­lion.

A cou­ple of news in­flu­enced the cap­i­tal mar­ket dur­ing the week, in or­der to keep the bench­mark on pos­i­tive track. The first one was re­lease of third tranche of In­ter­na­tional Mon­i­tory Fund un­der its ex­tended fa­cil­ity pro­gram. As per de­tails, af­ter com­plet­ing the sec­ond re­view of Pak­istan's eco­nomic per­for­mance, IMF re­leased the third tranche of US$556mn un­der the on­go­ing US$6.8bn sup­port pro­gram.

The Ex­ec­u­tive Board also ap­proved govern­ment's re­quest for waivers of non-ob­ser­vance of the end-De­cem­ber 2013 per­for­mance cri­te­ria on net swap/for­ward po­si­tion and govern­ment bor­row­ing from the State Bank of Pak­istan (SBP) based on cor­rec­tive ac­tions taken by the au­thor­i­ties.

Fur­ther­more, the World Bank's in­di­ca­tion for pro­vi­sion of US $ 1.7 bil­lion to Pak­istan, also pumped a new spirit into the in­vestors' cir­cles. Ac­cord­ing to the Fi­nance Min­is­ter, Ishaq Dar the World Bank has agreed to pro­vide Pak­istan with US$1.7bn. World Bank of­fi­cials are ex­pected to meet in May 2014 to ap­prove the amount. Out of the to­tal US$1.7bn, US$700mn would be set aside for the con­struc­tion of Dasu Hy­dro Power project.

It is per­ti­nent to men­tion here that these funds com­ing in and ex­pected flows from 3G/4G auc­tion, Pak­istan's forex re­serves are ex­pected to climb up to US$11bn by the end of FY14 (June 2014). Com­ment­ing on the trad­ing at KSE dur­ing the week, se­nior an­a­lyst Samar Iqbal said, "Mar­ket gained 1% to close at 27,116 in a volatile week with 10% de­creas­ing aver­age vol­umes of PKR7.5bn. In fu­ture roll over week, ma­jor news re­mained, Govt rais­ing record Rs.530bn amount in PIB auc­tion, ap­proval of IMF tranche of around US$550mn and ex­pec­ta­tions of fur­ther cur­rency ap­pre­ci­a­tion with in­creas­ing coun­try for­eign re­serves, PPL's dis­cov­ery in Naushahro Feroz block, and Govern­ment's de­ci­sion of main­tain­ing gas prices." She said that bank­ing stocks ral­lied fol­low­ing PIB auc­tion an­tic­i­pat­ing bet­ter earn­ings, fol­lowed by ce­ment sec­tor as in­vestors are op­ti­mistic about bet­ter ce­ment sales for March quar­ter. Go­ing for­ward, CPI an­nounce­ment, budget re­lated news flows and lo­cal cur­rency move­ment will be eyed. Naveed Tehseen, an­other ex­pert on cap­i­tal mar­ket said, "De­spite the neg­a­tive start to the week, where the KSE100 In­dex lost 374 points in the first trad­ing ses­sion of the week, the mar­ket re­cov­ered well to close at the 27,116 level (+1.3%WoW). How­ever, in­vestor par­tic­i­pa­tion re­mained on the lower side, ev­i­dent from the fact that aver­age daily vol­umes dropped by 18%WoW to 154mn shares."

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