KSE’s performance likely to remain unaffected during Ramazan

RECORDER REPORT

KARACHI: The holy month of Ramazan is around the corner, which historically has led to lower volumes at the local bourse, analysts said.

Looking back at the 10-year historical data, trading volumes averaged at 220 million shares, while in Ramazan, the trading volumes on average dropped by 32 percent to 150 million shares, they added.

“The decline is due to reduced trading hours and religious obligations in the month. Nevertheless, the market performance has been unaffected as the KSE-100 index has been able to record a 10-year average gain of 4.1 percent during Ramazan”, Naveed Tehsin, an analyst at JS Global Capital said.

Furthermore, with corporate result season expected to coincide with Ramazan this year, market was likely to receive some impetus, he added.

He said the seasonal factor of Ramazan is due to reduced trading hours and religious indulgence. Trading volumes averaged at 150 million shares during Ramazan over a 10-year period, which depicts a decline of 32 percent compared to the overall 10-year average (220 million shares).

Encouragingly, the 10-year history indicates that activity increases significantly in the month immediately following Ramazan as volumes in that period have averaged at 309 million shares.

Despite lower turnover in Ramazan, the KSE-100 index has recorded a 10-year average gain of 4.1 percent during the holy month and out of the last 10 years, only once the market witnessed a negative return that was last year in 2011, he said.

The Ramazan will coincide with the peak of the result season; therefore, the corporate results of especially high dividend yielding stocks are expected to further provide impetus to the market, he said, adding the turnover of the market was expected to remain on the lower side with the start of Ramazan; however, performance of KSE-100 index is likely to be unaffected during the month as evident from the historical data.