KSE sustains momentum, breaks 11,600 barrier

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KARACHI: The local bourse sustained impetus and broke the barrier of 11,600 points after 127 weeks. International oil prices crossed $90 per barrel during the week, which bode positive for the oil sector, as was reflected in the sector’s performance, up by a weekly 1.7 percent.
On the macro front, inflation spiked to an 18 month high of 15.48 percent due to a spillover effect of the floods and surging energy prices. Furthermore, WTO’s rejection of agreeing to export duty free concession for Pakistan from the EU dampened the textile sector. Overall, average daily volumes boosted by a weekly 22 percent to 182 million shares.
The benchmark index traversed a range of 269 points during the week aided by a healthy turnover of 182 million shares. The week’s last session saw the KSE100 index reach a peak level of 11,677 points, which is the highest since the lifting of the floor in 2008.
The index accumulated 214 points or 1.87 percent during the week, closing at 11,620 level, a meager 57 points below the peak. The week’s activity indicated that the local bourse has bottomed out and attractive valuations are now strong enough to break through a barricade of adverse news flow.
Annual inflation stood at 15.48 percent during November 2010, reaching 18 months high and seemingly bringing some correction to a bull controlled market on Thursday. In addition, on the negative front, SBP also permitted individuals to trade in T-Bills and PIB’s which was initially believed to adversely impact banking sector’s deposit base and hence valuations.
However, MCB contributed 34 points to the index during the week, showing that the banking sector was now immune to unhealthy winds. Oil price rallied to a two year peak of $92/barrel during the outgoing week and was the plausible reason behind the 35 points contribution by OGDC to the KSE100 index.
The overall buying dominated market sentiment, while steady inflow of foreign investment worth $12 million during the last four sessions is also thought to have buttressed the index’s smooth ride north. Local funds are also likely to continue building up their portfolios with lucrative scrips irrespective of unfavorable economic indicators.