THE KASB REVIEW

STOCK MARKET AT A GLANCE

 

 

By SHABBIR H. KAZMI
Updated Nov 23, 2002

 

At the end of the previous week, the State Bank of Pakistan (SBP) cut the three-day Repo rate by 150bps from 9.0% to 7.5%. Consequently, yields on government securities and markup based investments are likely to decline, making equities even more attractive. The IMF review was extremely favorable

 

with Pakistan meeting most of the targets for the first time. Moody's Investor Services changed the outlook on Pakistan's foreign debt from 'stable' to 'positive'. It is expected that both these factors will improve the foreign fund managers' stance on Pakistan's economy. Political uncertainty prevailing for over a month finally ended anticlimatically with the Speaker, Deputy Speaker and Prime Minister all being from PML (Q).

As a result of these positive triggers the market re-commenced its bull run. However, the week ended with minor technical corrections.

MARKET THIS WEEK

Positive economic triggers and the end of the political turmoil resulted in the KSE100 Index ('Index') rising by 3.29% to close this week at well beyond the 2300 levels of 2,346 points as against 2,272 points at the end of the previous week. There was considerable volatility in the Index during the week with a high of 2,369 points and a low of 2,272 points.

The stocks of interest this week were Hubco, PTCL, Shell and Unilever. The former two attracted considerable buying interest with Hubco reaching its historical post-dividend high prices and PTCL breaching its pervious high of PkR21.25 per share. The latter two i.e. Shell and Unilever recorded PkR25 and PkR21.50 per share rise in prices.

Average daily volume increased by 52% this week from 139mn shares to 212mn shares. Volumes were very high during the first three trading sessions, however during the corrections in the latter half of the week, volumes declined considerably.

OUTLOOK FOR THE FOLLOWING WEEK

We believe that the market has already factored in all the positive economic and political developments this week. Thus in our opinion, the market should remain range bound with support coming in at lower levels and profit taking at higher levels.

DAILY DRAMA

The 150bps decline in discount rate over the weekend triggered a 28 points jump in the Index, which rose from 2,272 points on Friday to close marginally below 2300 points on Monday. The decline in the discount rate made the higher dividend yielding stocks extremely attractive such as Fauji Fertilizer, which rose by nearly PkR3 per share. FMCGs also increased in value recording healthy gains. Trading volume also increased to 228m shares indicating the sustainability of these levels.

Improvement in Pakistan's foreign debt rating and a continuation of the previous day's markup rate driven rally resulted in the Index rising by another 33 points to close Tuesday's trading at 2,333 points. The rally was largely due to massive buying in PTCL and Hubco and there were rumors that a major foreign fund was interested in Hubco. Lead gainers were again the FMCG's and Fauji Fertilizer. Volume rose by a further 9% to 249mn share showing the strength of the rally.

The election of the PML (Q) nominees as Speaker and Deputy Speaker subsided to an extent fears of MMA and PPP coming into power. With the investors seeing an end to the political uncertainty, bulls gained strength and the Index rose further by 24 points to close Wednesday's trading at 2,357 points. PTCL and Hubco led the rally and total volume traded increased to 304mn shares.

Apprehensiveness due to lower vote count during the Prime Minister's elections and profit booking at higher levels caused the Index to decline marginally on Thursday by 5 points to close at 2,352 points. Mirroring bear runs and technical corrections in the recent past, trading volumes declined significantly to 160mn shares. Although Hubco maintained its upward drive, decline in PTCL and most Tier 2 stocks caused the marginal decline in the Index.

Trading on Friday remained slow as volumes declined further to 117mn shares. During the first Khadim Ali Shah Bukhari & Co. Ltd. few hours of trading the index declined to the day's low of 2,333 points, however support at these low levels resulted in the Index to close the week at 2,346 points.

MARKET ROUNDUP

..

LAST WEEK

THIS WEEK

% CHANGE

Mkt. Cap (US $ bn)

8.81

9.07

2.95

Total Turnover (mn shares)

694.11

1057.48

52.35

Value Traded (US$ mn.)

519.55

642.61

23.69

No. of Trading Sessions

5

5

 

Avg. Dly T/O (mn. Shares)

138.82

211.50

52.35

Avg. Dly T/O (US$ mn)

103.91

128.52

23.69

KSE 100 Index

2271.60

2346.34

3.29

KSE All Shares Index

1419.25

1460.86

2.88

Source: KSE, MSCI, KASB