Karachi share market remained subdued during the week that ended on December 19, 2014, due to a heinous terrorist attack on Peshawar's Army Public School and political instability. The benchmark KSE-100 index closed at 31,011.15 points, down by 578.67 points or 1.8 per cent (WoW) basis.
Copyright Business Recorder, 2014
Although Pakistan Tehrik-e-Insaaf (PTI) called off their 126-day long sit-in at Islamabad in the wake of the terrorist attack, the KSE-100 closed at 31,011.15 down by 1.8 per cent or 578.67 points WoW basis. Net foreign selling clocked in at US $30 million during the outgoing week. Raheel Ashraf of JS Research said that average daily volumes also dropped by 15 per cent WoW to 203 million shares. He said that heavyweight oil and gas sector remained under duress due to uncertain outlook over oil prices, while the textile sector felt the heat after the prime minister removed moratorium over death penalties as the decision could potentially risk Pakistan's GSP plus status.
Other key highlights of the outgoing week were IMF board approving US $1.05 billion tranche for Pakistan; cotton arrivals increasing by 8.03 per cent YoY to 13.2 million bales in FY15; power sector's receivables soaring to Rs 581 billion; FDI jumping by 19 per cent YoY to US $423 million in five months of FY15 and the announcement by prime minister to cut Rs 2.32 per unit in power tariff.
The average market capitalisation has dropped by 1.5 per cent to Rs 7.089 trillion from Rs 7.200 trillion. Similarly, the average daily volume has also shrunk during last week, depicting 14.6 per cent decline to 202.79 million shares from 237.58 million shares. Abdul Azeem of InvestCapital said that from the beginning of the week, the index was pressured due to the political situation in the country.
A further blight to the index came on Tuesday when terrorists attacked a local school in Peshawar. The investors' despise for the attack led them to offload their positions and reduce their exposure. Panic selling in the market razed the index by 887 points and the same closed at 30,808.33 witnessing a biggest drop in four months.
He said that easing-off political situation after the PTI's announcement to call of sit-ins countrywide was a point of confidence for the investors in a depressing environment which towed the index to green zone again. He said that the market participants however panicked when reinstating of capital punishment was announced, plunging the textile stocks.
Moreover, Azeem said that a positive upshot in the latter part of the week came when the IMF announced the approval of $1.1bn tranche under the Extended Fund Facility (EFF). The investors applauded the announcement by IMF leading to the rallying of the index. Oil stocks tumbled during the week due to a bleak oil outlook and as the WTI Crude oil prices dropped below US $55/barrel. However, oil stocks recovered moderately latter in the week as the WTI jumped up to 7 per cent. Investors remained focused on cement and banking sector as the cement industry is enjoying low coal prices, low power tariff, increase in demand and expected decrease in interest rate to further improve their bottom line.
In banking sector, it is expected that their provisions and NPLs will most likely decrease due to improvements in manufacturing industry dynamics. The roller coaster ride of investor confidence and emotions are portrayed in daily traded volume and the foreign cash flows.