KSE climbs 1.3pc WoW, further betterment expected
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."