Equity market stays under selling pressure
Sunday, January 31, 2010
KARACHI: Confusing developments on political front related to implementation of Supreme Court judgment on annulled NRO kept the equity market under selling pressure for the second consecutive week.
Better than expected corporate results announced by a few of blue chips for the period ended on December 31 allowed some result-specific buying during the week.
The KSE 100-share Index fell 1.67 per cent or 163.40 points on weekly basis and closed at 9,614.19 points. Its junior partner the 30-Index shed more 2.21 per cent or 228.08 points and concluded at 10,056.18 points.
Although more than half of results announced this week were better than market expectations, political instability on account of implementing the Supreme Court detailed judgment on void NRO in letter and spirit did not allow market to behave beyond conservative limits, analysts said.
Subsequently, the NIT-LOC related selling, KSE exposure calls to brokers, declining crude oil prices in the world markets, depreciating rupee versus dollar and spill over effect of bearish trends in regional markets altogether kept local bazaar under selling pressure ahead of likely tight monetary policy announcement.
The first four (Monday-Thursday) sessions of the week closed on negative note, cumulatively bringing down the market by another two per cent. But buying on lower levels on Friday (also seen on Thursday) helped market recover modestly.
Buying in result-specific shares reduced the average daily turnover to 167.27 million shares this week, which was about 27 per cent lower than last week’s turnover.
On the contrary, turnover in future market jumped to robust (i.e. 38 million shares in a single session on Friday) on speculation about a slight cut in the central bank lending rate. State Bank of Pakistan, however, announced no change (as expected) in its lending rates on Saturday evening.
Selling pressure resulted in wiping out another Rs46 billion from the head of overall market capitalisation, which fell to Rs2,767 billion this week.
Accordingly, local companies, overseas investors and mutual funds emerged as net sellers during the week of $13.6 million, $1.3 million and $2.5 million respectively. In contrast, Banks and NBFCs were the net buyers of $11.7 million and $1.3 million, calculated JS Research.
KASB Securities reported that negative headlines around politics, NIT-LOC related selling pressure and dip in regional markets kept the market under pressure.
Oil and gas sector remained under pressured on declining crude oil prices meanwhile PPL received battering on lower than expected earnings and payout (EPS of Rs4.8 and Rs4 dividend) for second quarter of fiscal year 2010.
Fertilizers attracted interest as FFBL posted stronger than expected 2009 result (EPS of Rs4.05 and Rs2.25 dividend) but lost its charm later in the week as FFC posted slightly below expected 2009 earnings of Rs13 per shares though dividend was more than expected at Rs12.76 per share.
Lucky Cement also released results for the first half of fiscal year 2010 in the week that were somewhat better than expected earnings (EPS Rs5.89) on better export volumes. Improving industrial production failed to excite the market as foreign exchange reserves volatility kept sentiments at bay, maintained KASB Securities.
Among blue chips, PTC is the only scrip scheduled to announce results of the first half of fiscal year 2010 next week. Volumes in PTC remained robust, while activity in the other blue chips remained muted, JS Research added.
Wazir Ali Industries, Gharibwal Cement, Lucky Cement, Lotte Pakistan PTA and Colgate Palmolive were major gainers while Sigma Leasing, Silkbank, Abbott Laboratories, Engro Polymer and WorldCall Telecom were major losers at KSE this week. —SS