Positive trend on KSE

The Karachi share market witnessed during the week ended on November 5, 2011 on the back of investors'' interest, on dips, mainly in the fertiliser sector stocks. The KSE-100 index rose by 395.63 points, closing the week at 11,957.30 points.
Trading, however, remained low due to a long holidays ahead of Eid, and the average daily volume at the ready counter declined to 73.35 million shares, or 2.5 percent, as compared to previous week''s 75.25 million shares.
Market capitalisation increased by Rs 95 billion to Rs 3.116 trillion. Foreign investors turned net buyers of shares with a net inflow of $193,000 as compared to net selling of $7.8 million of previous week. On Monday, the market opened on a strong positive note and the index surged by 307.21 points to close at 11,868.88 points with the volume of 101.135 million shares.
On Tuesday, the investors opted for profit taking and the index witnessed a correction of 106.16 points to close at 11,762.72 points with 84.404 million shares. On Wednesday, the index lost 16.63 points and closed at 11,746.09 points with 63.860 million shares.
On Thursday, investors'' interest revived and, on the back of fresh buying, the index gained 61.37 points to close at 11,807.46 points with 61.486 million shares.
On Friday, the index gained 149.84 points to close the week at the level of 11,957.30 points with 55.885 million shares. Yawar uz Zaman, analyst at InvestCap, said that the market started the week on a bullish note after Engro raised the price of urea by Rs 400/bag to offset the production loss due to increased gas curtailments. As a result, almost all fertiliser scrips were trading close to their upper circuit.
However, prolonged shortage of gas supply to Engro was supposedly over after government intervened ensuring provision of 100 mmbtu gas to Engro plant soon. Furthermore, the government efforts to resolve circular debt issue for the energy/oil sector also gained traction.
Pakistan''s awarding MFN status to India to promote bilateral trade was also received with vigour by market participants. However, CPI inflation, clocking in at 10.96 percent on year-on-year basis for October 2011, disturbed market sentiment a bit with little hopes for further discount rate cut in November 2011 monetary policy.
Naveed Tehsin at JS Global Capital said that the week started off on a positive note owing to news of hike in urea prices by Engro, despite concerns over domestic political scenario and global economic outlook. However, the price hike was later reversed after intervention by the government. Overall, due to the long weekend ahead activity remained dull.
On the macro front, CPI for October clocked in at 10.96 percent on year-on-year basis as compared to consensus expectations of 10.5 percent. However T-bills rates witnessed a decline of 7-9bps in the auction held during the week.
The gas load management plan was approved during the week and it was decided that two out of four fertiliser plants on SNGPL network would not be supplied gas in November. To recall, Engro was still facing gas suspension at its new urea plant due to which the company raised its urea prices on Monday. However, government intervention led to a reversal in the price hike.
The S&P affirmed Pakistan''s long-term rating at ''B-'' and short-term rating at ''C''. The rating agency also maintained ''Stable'' outlook on Pakistan on the back of strong external account position''. Moreover, the Pak rupee also strengthened during the week and touched its three-month high of Rs 86.16 against $.
PSO announced higher than expected first quarter of FY12 result of Rs 14.50/share, up 207 percent on year-on-year basis, while Engro posted nine-month of 2011 earnings of Rs 14.21/share, up 27 percent on year-on-year basis. The two stocks gained 12 percent and 21 percent on week-on-week basis respectively.