Equities maintain uptrend

Karachi equity market maintained positive momentum throughout the week ended on October 1, 2011 supported by heavy buying in oil and fertiliser sectors by local investors. According to analysts, expected cut in key policy rate by 50 basis points was also a reason of positive sentiment in the market during the week.
The closing of the week was on a big positive note as the government announced rate cut in National Saving Schemes ahead of the next monetary policy review in first half of October 2011, they said.
During the week, KSE-100 index surged by 155.11 points or 1.34 percent to 11,762 points from 11606.86 points. There was an increase of Rs 43.677 billion in market capitalisation to Rs 3.103 trillion from Rs 3.060 trillion.
Trading volume on ready counter also improved and surged to 365.877 million shares from 359.6 million shares traded a week earlier.
However, foreign investors remained net sellers of $7.3 million shares as compared to inflow of $1.7 million of previous week.
The rift between Pakistan and US had negative impact on the equity market and bearish trend was witnessed at Karachi share market on first trading day due to selling pressure by local and foreign investors on concerns over the prevailing uncertainty.
On Monday, KSE-100 index declined by 341.83 points to close at 11,265.03 points from 11,606.86 point.
On Tuesday, strong recovery trend was witnessed on the back of improvement of Pak-US relations and KSE-100 index closed at 11,531.24 points gaining 266.21 points.
On Wednesday, the market again witnessed positive trend, with the KSE-100 index gaining 94.45 points, closing at 11,625.69 points.
On Thursday, the KSE-100 index was up by 16.77 points to close at a level of 11,642.46 points.
On Friday, the market closed in positive, with support of buying in fertiliser and oil sectors by local investors. The KSE-100 index gained 119.51 points to close at 11,761.97 points.
Total futures open interest was down by 47 percent WoW and the top 5 scrips at the futures counter constituting 58 percent of the total open interest were Ehgro, POL, NBP, FFC and DGKC.
According to Yawar Uz Zaman, an analyst at InvestCap despite the anxiety created by rising tensions between Pakistan and the US, equity market continued to sustain the positive momentum during the last week except the very first day of the trading week, where index lost 341 points.
While concerns were raised by the US against Pakistan in context of its role in supporting certain terrorist elements in the ongoing war, tensions were partly defused by positive assurances by close allies (China in particular) as well as build-up of national consensus to devise a strategy in the advent of an extreme situation, he added.
He said that Pak Rupee depreciated and touched the ever high level of Rs90.10 to the dollar in the open market on account of higher demand of the greenback in the near future.
Talking about the outlook of market he said that while looking at the secondary market (T-bill and PIBs'') trading pattern and the yield curve, it appears that market is expecting aggressive round of discount rate cut with inflation expected to come in 11 percent for September 2011.