KARACHI: The Karachi stock market closed in the positive zone during the outgoing week on support from institutional interest in selected blue chips on expectations of record earnings announcements and rising local fertilizer, cement and power tariffs.
Analysts said other factors for the positive trend included record exports near $25 billion and current account surplus of $542 million for fiscal year 2011, which contributed towards healthy gains in the market.
The Karachi Stock Exchange (KSE) 100-share index gained 121.25 points or 0.98 percent to close at 12,467.77 points as compared to 12,346.52 points of the previous week.
“Alleviated political tensions after the Sindh governor resumed office and the rejection of the proposal to end aid to Pakistan by the US Congress Panel kept the market in the green zone,” said JS Sec analyst Rabia Tariq. “Activity was witnessed in banking and fertilzier scrips in anticipation of strong corporate results in the upcoming week.”
Key companies are scheduled to announce their quarterly earnings next week, mainly in banking and fertilizer sectors. As a result, scrip specific activities were witnessed in FFBL (up 1.1 percent on weekly basis) and NBP (up 3.4 percent), she said and added that moreover, cement scrips also remained in the limelight with Lucky Cement and Dera Ghazi Khan Cement gaining 3.8 percent and 4.3 percent, respectively owing to expectations of strong earnings and rising retention prices.
Current account registered a surplus of $542 million in FY 2011, its first full year surplus since FY 2004 on increased receipts from exports and worker remittances. On the contrary, large-scale manufacturing data for May reported a contraction of 2.3 percent on yearly basis, led by a significant drop in production of
electric equipment primarily due to increased power outages. Government borrowing too hit a historic high level of Rs 2.9 trillion, up 33 percent owing to higher subsidies and rising current expenditure.
Margin Trading System investment (as of July 21, 2011) stood at Rs 247 million, with average rate standing at 16.55 percent. Foreigners turned net sellers of $22.3 million, while individuals concluded the week as net buyers of $37.4 million.
The turnover went up 82.36 percent to close at 126.25 million shares as compared to 69.23 million shares of the previous week.
“Bullish activity was witnessed in the earnings announcements session at KSE this week with rising volumes after global markets showed strong recovery on Greece rescue agreed by eurozone leaders,” said Arif Habib Investment Ltd Director Ahsan Mehanti. “Record exports near $25 billion and current account surplus of $542 million for fiscal year 2011, institutional interest in selected blue chips on expectations of record earnings announcements, rising local fertilizer, cement and power tariffs played a catalyst role in the positive sentiment at KSE despite concerns over rising government debt and circular debt in Pakistan.” staff report
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