After touching an all-time high at 17,000 points on the last trading session of 2012 on Monday, the KSE-100 index saw a pull back as investors in shares at the Karachi stock market opted to book profits.

The index plunged by 294 points from 16,940 points at the start to the week to close at 16,649 points on the last trading session on Friday.

While optimists dismissed the stock battering to a ‘long overdue correction’, most market participants attributed the dismal start to the New Year to uncertainties on the political front.

Investors were concerned over developments ahead of the upcoming elections and uncertainty about the caretaker government set-up. “Investors have opted to take a cautious or conservative stance until the dust settles on the political front”, says a stock strategist.

Equity dealer Samar Iqbal at brokerage Topline Securities pointed out that the New Year was greeted warmly by the global equity and commodity markets. Yet the Karachi bourse which had gained 49 per cent in 2012, lagged behind.

Another equity brokerage house compiled figures of performance by regional markets, which showed that except for Pakistan bourse which showed negative return in the first week of 2013, almost all regional markets had moved higher in the range of 0.21 per cent (Malaysia) and 3.65 per cent (Dubai).

The news flow was mixed. Naveed Tehsin, analyst at JS Global listed several developments on the macro economic front. Those included increase in foreign exchange reserves to $13.8 billion post- release of $688 million under the Coalition Support Fund; lowering of export refinance rate by 20 basis points by the central bank and government intention to issue Rs15 billion in Term Finance Certificates to ease circular debt.

Other key highlights of the week were: Acceleration in CPI for the first time in seven months to clock in at 7.93 per cent for December 2012;  downward revision in profits on National Saving Schemes; revenue shortfall of Rs65 million faced by the FBR in the six months of the current fiscal year; Ogra announcement of 6.1 per cent hike in gas tariff for domestic users and cement plants, a 5/5.5 per cent increase for IPPs/captive power plants and 2.4/5.5 per cent raise for feed/fuel gas for fertiliser plants.

Foreign portfolio investors in equities were net sellers to the extent of $2 million, compared to net sales of equity worth $5.6 million the previous week. Brokers said that overseas investors also thought it wise to take profit along with local investors.
“There, however, was no panic selling”, contended an institutional equity sales manager.

Market capitalisation of KSE stood down by two per cent to Rs4.173 trillion from Rs4.257 trillion at the close of earlier week.

The average daily volumes increased by 7.4 per cent to 148.13 million shares, from 137.89 million shares the previous week.
And average daily traded value jumped by 10.5 per cent to Rs3.41 billion, from Rs3.08 billion. Thehealthy growth in volume was in part attributable to a full five-session week compared to a shortened trading week of four days the previous week on account of holiday on December 25.

Major value gaining scrips during the week included: Millat Tractors, Askari Bank, Pak Suzuki Motor Company, Kot Addu Power, Fauji Fertiliser Co, Fauji Fertiliser Bin Qasim, Hub Power Company, Pakistan Petroleum, Attock Petroleum, National Refinery and Allied Bank.

The big losers were: Sui Southern Gas Company, Engro Polyme, LotPTA, Hum Network, Grays of Cambridge, Azgard Nine and IGI Insurance Byco Petroleum and Bank of Punjab stood amongst the most active scrips while cherry picking was seen in dividend yielding stocks like Fauji Fertiliser and Independent Power Producers.

The volume leading stocks included: Jah.Sidd.Co, Fauji Cement, NIB Bank and PTCL.

Future Outlook: “The market is likely to remain patchy in the coming week”, predicts analysts at brokerage AKD Securities. The reason being that investors would be eyeing the threatened Long March on Jan 14, to see if it takes place or is averted. With the second-quarter of financial year 2013, just concluded, the next trigger for the market would likely be the start of the financial results season. “In this regard, cements and textiles are particularly expected to report healthy profits where the two sectors are again likely to be in the limelight in trading in the coming days”, say the analysts.

The brokerage KASB Securities observed that “the very fluid political climate of late will be worth tracking as the timeline for caretaker government and elections would garner the most attention”.

On the other hand, the coming week officially marks the start of earnings announcement season, albeit select names are on the cards for the next week. Hence, result-based activity and anticipation of stock/cash payouts could pick up pace.— Dilawar Hussain