SHARES at the Karachi Stock Market climbed during the early part of last week but slipped midway, with the KSE-100 index closing the week lower by 0.35 per cent or 48 points from 13,925 to 13,877 points.

The volume remained thin; on an average 141 million shares were traded daily, down 10 per cent over the earlier week.

Yet, in terms of traded value, the activity was six per cent higher with trading seen in $58 million worth equity per day.

Bilal Qamar, analyst at the JS Global, said the investor sentiments during the week were driven by budget-related news.

Furthermore, a news report regarding hike in gas development surcharge kept investors interested in the chemicals sector, while a possible cut in Federal Excise Duty (FED) on cements in the budget, stirred activity in the construction and material sector. The Economic Survey
was released during the week, which showed that most of the macroeconomic targets were missed.

Foreign investors took interest in the market and buying was witnessed during the early part of the week. However, they ended the week with net selling of $0.01 million worth shares.

Samar Iqbal, equity dealer at the Topline Securities observed that the market had remained depressed during the week amid weak local currency, falling global stock and commodity markets. Budget recommendation of gas cess dampened investors’ sentiments further, while cement sector also remained under focus on conflicting news regarding reduction in excise duty in the new budget. Volumes declined by 10 per cent to 140 million shares on an average on week-on- week basis.

Fertiliser sector came under the limelight during the week, as news flows suggested that a proposal was included in the budget to raise the
gas development surcharge on the feedstock gas. Earlier in the week, news came in of the disapproval of such news by the law ministry.

However, later during the week, Mr Naveed Qamar, Minister for Petroleum, was reported to have taken notice of it and managed to convince the law ministry to approve the proposal.

During the outgoing week, shares in Attock Refinery, PIAC, Silkbank Limited, IGI Insurance and Shifa International Hospitals Ltd were major gainers while Media Times Limited, Unilever Pakistan Foods, Pak Services, TRG Pakistan and Pace (Pak) Ltd were major losers in the benchmark KSE-100 index.

Analysts at the brokerage Investcapital pointed out that during the month of May, looming budget-related uncertainties kept investors concerned, which made most of them keep to the sidelines, resulting in low volumes.

The KSE-100 index stood shaded by 1.5 per cent in the month of May over the earlier month with market volumes down by a significant 38 per cent on an average basis as compared to April average volumes. However, the benchmark KSE-100 index provided a hefty 21 per cent year-to-date (YTD) return. During May, foreign investors lapped up the local equities, resulting in net portfolio inflow of $38.9 million, which happened to be highest monthly inflow since Jan 2011.

Among the regional markets, only two Asian regional countries posted positive returns during May, which included Vietnam up by three per cent and China one per cent. However, Pakistani equities remained above the average Asia regional equities’ performance of negative nine per cent and posted negative 1.5 per cent during the month.

Pakistan equities also stood amongst Top-3 equity markets standing in the green zone as far as foreign inflows towards equities was concerned. Pakistan received $39 million inflows during May 2012, aggregating to $77 million year-to-date as against Asia Pacific’s total net outflows of $8.5 billion in May 2012.

Analyst Mazhar A. Sabir and Abdul Azeem observed that going forward the behaviour of KSE-100 index would be largely dependent on what the budget holds for the market. In the middle of murky economic indicators, the current appreciation in dollar against Rupee by 4.5 per cent in current financial year-to-date was also a big concern for several sectors and the stock market. Most analysts, however, were upbeat on stocks in cements, fertilisers, textiles and telecom sectors.—Dilawar Hussain