KSE index loses 5.9 percent in third quarter 2011: highest fall in last quarters of fiscal year 2011

The KSE-100 index declined by 734.06 points (5.87 percent) during the third quarter (July-September) of 2011 to close at 11,761.97 points from previous quarter's 12,496.03 points. "It was its sharpest fall since the fourth quarter of 2008 when the price floor was removed during this quarter", analysts said.
Trading remained extremely low during this period as the average daily volume fell to 59 million shares, lowest in 40 quarters. Selling was seen both from local and foreign fronts. Foreign investors withdrew $46 million from the equity market during this quarter.
"The gloom at the bourse for the most part was owing to S&P downgrading of US debt rating, fuelling speculation of another recession, the strained US-Pak relationship due to the former accusing Pakistan of having links with the banned Haqqani network, deteriorating law and order situation in Karachi and the subsequent tension on the political front", Atif Zafar, an analyst at JS Global Capital said.
"Nevertheless, the KSE-100 index managed to smartly outperform its regional peers by an average 7 percent, thanks to impressive corporate result announcements and lower than anticipated inflation figure (albeit due to change in the base year) - hinting towards cut in the discount rate in the upcoming policy review", he added.
He said selective buying was seen during this period on strong corporate results. Fertiliser stocks were yet again the star performers in the third quarter of 2011, with FFBL, Fatima and FFC outperforming the index by a respective 50 percent, 19 percent and 17 percent on the back of strong corporate result announcements for second quarter (FFBL and FFC earnings rising by an average 84 percent in second quarter) and expectation of further growth in the forthcoming quarter.
The BAFL and SSGC also gained 18 percent and 14 percent, respectively owing to better than expected earning announcements, while LUCK outperformed the index by 18 percent because of expected improvement in margins thanks to rising prices in the domestic market. MCB, OGDC and PTC were notable laggards, down 12 percent, 12 percent and 18 percent respectively. "While the strong fundamentals remain intact, concerns over US-Pak relationship and global economic outlook are likely to influence market sentiments, going forward", he said.