KARACHI – The local bourse saw investors book profits as the market awaits the Monetary Policy Statement (MPS), due on Jan 29, 2011. The index dwindled 0.1 percent to close at 12,477 points, while volumes declined by 19 percent to reach 112 million shares.
The major trigger was FFC’s result, which was above market expectations. FFC announced a 25 percent bonus, in addition to the anticipated cash dividend. Furthermore Engro’s price remained stagnant despite a rise in it’s DAP price.
The KSE-30 index closed at 12174.47 levels following a loss of 42.52 points, while the all share index squeezed 4.69 points to close at 8703.15 points.
A meager 112 million shares were traded during the day, dominated by the top four volume leaders. Activity remained range bound, as the KSE-100 index traveled within the band of 106 points around 12,500 levels. FFC closed in the red zone, despite healthy earnings announcement for CY10. The ongoing result season failed to refuel the bulls as savvy investors await impetus of MTS implementation, along with positive economic news.
Delay in launch of leverage indicates an extension in the adjustment mode; however decline in main board stocks offering consistent dividend yields, along with decent growth, will certainly be an opportunity for liquid participants. Selling is likely to continue in various stocks, either trading at inflated levels, or those facing wrath of rising interest rates, along with those suffering from a high and inefficient decline in local and export sales.
Although, a further increase in benchmark interest rate to the tune of 50-100bps seems eminent; economic reforms, government’s efforts to restrict inflation and borrowings from SBP might reduce some pressure for future reviews. The petroleum prices review and government’s decision to slide PDL, refraining from a further increase in petroleum product prices will further hit fiscal numbers.
Political volatility is likely to increase if prices swell further. Therefore, equity market participants should opt for caution, while technical recovery might continue to provide short term trading opportunities. Stop losses will prove prudent and strength will allow various sector and stock swapping opportunities, said Hasnain Asghar Ali at Aziz Fidahusein.
