KSE index loses 94 points

The KSE-100 index lost 94.05 points and closed at 12,390.12 points during the week ended on July 9, 2011 as the investors opted to offload their holdings due to prevailing political and law and order situation. The average daily volume increased marginally by 3.5 percent to 58.39 million shares as compared to previous week's 56.41 million shares.
Market capitalisation declined by Rs 23 billion to Rs 3.262 trillion. On Monday, the market opened on a positive note and the index surged by 76.11 points to close at 12,560.28 points, with volume of 57.263 million shares. On Tuesday, the index gained 16.20 points to close at 12,576.48 points with 71.547 million shares.
On Wednesday, the investors opted for selling and the index lost 42.93 points to close at 12,533.55 points with 68.500 million shares. On Thursday, the index declined by 91.15 points to close at 12,441.40 points with 65.095 million shares.
On Friday, the index lost 51.28 points to close at 12,390.12 points with 29.526 million shares. Atif Zafar, an analyst at JS Global Capital said that the political uncertainty and deteriorating law and order situation in Karachi were the key concerns for investors. Moreover, Nestle's share price witnessed a sharp correction of 21 percent (the scrip gained had 15 percent in the preceding week), which alone contributed to a loss of 213 points to the index. The scrip now has the third highest weight of 6.6 percent in the KSE 100 index (was 2nd at start of the week).
Uncertainty on political front affected investors' sentiment while law and order, too, witnessed deterioration leading most business activities to a halt in the later part of the week, he said.
On the macro front, SBP in its third quarterly report for FY11 highlighted risks to country's external accounts, CPI for June came in at 13.1 percent (below consensus) and unofficial data suggest fiscal deficit at 5.3 percent for FY11.
SBP in its third quarterly report for FY11 highlighted concerns over the country's external accounts, going forward. It remained skeptical on rising remittances while highlighted falling cotton prices and rising oil prices as concerns for the country's trade account. CPI for June was released at 13.13 percent, taking inflation for FY11 to 13.92 percent while the country's foreign exchange reserves rose to an all time high of $18.25 billion.
The Construction and Materials sector outperformed the index by 2.3 percent during the week, a result of improving domestic cement demand outlook (offtake up 8 percent on month-on-month basis in June) and cut in taxes in the budget not being fully passed through to the consumers.
The Food Producers' underperformed the index by 12.5 percent led by a sharp decline of 21 percent in the Nestle Pakistan's share price.