Index surges by 134 points

The Karachi share market witnessed positive trend during the week ended on October 15, 2011 on the back of above expected cut in the policy rate by the State Bank of Pakistan (SBP). The KSE-100 index surged by 134.25 points and closed at 11,988.09 points.
Trading improved significantly and the average daily volume at the ready counter increased to 125.29 million shares, or 66 percent, as compared to the previous week's 75.50 million shares.
Market capitalisation increased by Rs 20 billion to Rs 3.146 trillion. Foreign investors remained on the selling side and withdrew $2.8 million from the local equity market during the week.
On Monday, the market opened on a strong positive note on the first trading session after announcement of monitory policy statement by the SBP, and the index surged by 238.48 points to close at 12,092.32 points with seven-month high volume of 183.078 million shares.
However, on Tuesday, the investors opted for profit taking and the index lost 37.50 points to close at 12,054.82 points with 141.708 million shares.
On Wednesday, the index gained 4.25 points and closed at 12,059.07 points with 117.813 million shares.
On Thursday, the investors opted for profit taking and the index declined by 92.78 points to close at 11,966.29 points with 91.682 million shares.
On Friday, the index gained 21.80 points and closed the week at 11,988.09 points with 92.163 million shares.
Yawar Uz Zaman, analyst at InvestCap, said that the market experienced bullish activity during the very first trading session of the week as the daily traded volume rose to 183 million shares. This was backed by an above expected cut in the policy rate by the SBP.
He said that high leveraged sectors such as cement, textiles, and autos with few fertiliser companies were expected to be the prime beneficiaries of 150bps slash in the discount rate. The mentioned sectors are expected to face relatively lower burdening financial charges, which in turn are expected to blossom their bottomlines ahead. Furthermore, surging exports (up 19 percent) and remittances (up 25 percent) during the first quarter of FY12 provided additional support to the market.
Furqan Ayub at JS Global Capital said that the week began on a bullish note for the KSE on the back of SBP's decision to cut the discount rate by 150bps against market's expectation of a 50-100bps rate cut. However, realisation of heightened macro economic risks tamed the excitement of the investors as the KSE-100 index gained only 134 points, up 1.1 percent on week-on-week basis.
The increase in fertiliser prices and the upcoming corporate announcements triggered a bullish rally in Fatima, FFC and FFBL, all outperforming the market by 14.8 percent, 8.8 percent and 4.2 percent respectively. APL also outperformed the market by 11.6 percent as investors await the result announcement of Attock group companies next week. High cement prices also prompted Lucky to outperform the market by 7.1 percent. On the other hand, blue chip banking stocks like UBL and NBP underperformed the market by 6.0 percent and 8.3 percent respectively, on fears of a decline in banking spreads after the cut in discount rate.