Profit-taking amid reduced trading

RECORDER REVIEW

KARACHI: Local investors opted for profit-taking during the outgoing week ended on September 7 and the benchmark KSE-100 index declined by 137.62 points on week-on-week basis to close at 15,253.96 points.

Foreign investors’ interest, however, continued and they remained net buyers of shares worth $300,000 during the week.

Trading activities were reduced because of investors’ cautious stance and average daily volumes at ready counter declined by 21.9 percent to 195.39 million shares against the previous week’s average of 250.24 million shares.

Total market capitalisation declined by Rs31 billion on week-on-week basis, dropping to Rs3.888 trillion.

The market opened on a positive note on Monday and the index gained 36.91 points to close at 15,428.49 points with total volumes of 200.619 million shares.

On Tuesday, investors opted for profit-taking and the index lost 40.36 points to close at 15,388.13 points with 182.971 million shares. This trend continued on Wednesday and the index declined by 94.74 points to close at 15,293.39 points with 174.197 million shares. The market witnessed another bearish session on Thursday and the index decreased by 104.86 points to close at 15,188.53 points with 189.084 million shares.

On Friday, the investors took fresh positions on available attractive low levels and the index recovered 65.43 points to close the week at 15,253.96 points with 230.102 million shares.

“After the buoyancy of last week, the local bourse entered a consolidation phase this week as investors opted for selective profit taking in blue chip stocks,” Furqan Ayub, an analyst at JS Global Capital said, adding that the investors interest increased in mid tier stocks during the week.

According to MoF Pakistan’s consolidated fiscal deficit for FY12 has registered at 8.5 percent of GDP against the revised target of 5.5 percent.

This included a one off payment on account of debt consolidation of Rs 391 billion, equivalent to 1.9 percent of GDP.

In the T-Bill auction this week the SBP sold treasury bills worth Rs 299 billion against total bids of Rs 509 billion. Participation in the 3M tenor was very limited (6.3 percent of the realized amount), hence the indication that market is expecting further monetary easing. Cut off yields for 3M, 6M and 12M papers witnessed a decline of 13-14bps to 10.27 percent, 10.31 percent and 10.35 percent respectively.

PTC outperformed the market by 14.9 percent on news flow related to the formalization of the ICH agreement, while strong growth potential kept EFOODS in the limelight with the stock outperforming the market by 2.9 percent. Conversely, DGKC and LUCK underperformed the market by 3.5 percent and 0.9 percent respectively on the back of weak cement sales figures in August, down 18.6 percent on month-on-month basis.

An analyst at AKD Securities said that there was a marked slowdown in foreign inflows with cumulative FIPI of $250,000 compared with last week’s net inflow of $7.7 million. Continued optimism on ICH sustained interest in the Telecom sector which yet again dominated activity at the KSE.

In this regard, volumes were led by PTC (95.27 million shares), TELE (81.21 million shares) and WTL (80.12 million shares) followed by MLCF (47.11 million shares) and KESC (38.36 million shares).

Top gainers during the week were SHEL (+14.7 percent on increase in margins on HSD post deregulation of HSD import parity pricing), PTC (+14 percent on ICH optimism), HCAR (+9 percent) and INDU (+8.9 percent), where auto sector scrips were boosted by the government decision to amend the depreciation schedule for imported cars. Market laggards were ABL (-6.2 percent), FFBL (-5.4 percent) and UBL (-4.7 percent) as banks continued to be sidelined on margin compression concerns.