KARACHI – Within the current week, the index shed over 472 points or 3.8 percent with an average volume of 95.45 million shares. It is worth mentioning that the index touched a high of 12,682 points on Jan 17, 2011 with year to date highest volume of 316 million shares during the preceding month. Average daily volumes were strongly affected in the current week volume as year to date average volume decline by 11 million to 150 million shares.
The foreign investment inflow of merely $1.25 million was not enough to influence the benchmark performance. Furthermore, the pre-result rally already incorporated the result declaration before the announcement of financial results; hence major stocks witnessed selling pressure rather buying euphoria after result announcement. Most of the results were in line with analyst expectation; hence the element of positive surprise was also missing up till now, which can be considered as price trigger.
FBS released inflation figures for the month of January 2011, where CPI inflation registered an annual increase of 14.19 percent, while year to date inflation at 14.55 percent down by 6.0 BPS over the preceding month. The decline in inflation can be attributed to base year effect where in January 2010 inflation surge by a greater pace resulted in lower inflation in January 2011. We still believe year to date inflation would end up with in the range of between 15.0 and 15.5 percent, said Bilal Asif at HMFS, adding that with limited resources, the government is looking at various options to enhance revenue base and curtail the expenses.
In one such measure, the government curtailed the size of the cabinet substantially. Amidst political pressure from opponent parties, the government has been unable to increase petroleum prices. It is believed that on average, a month of keeping oil prices untouched will cost the government between Rs 12-14 billion due to oil subsidies.
Keeping in view the index trend, advances to decline ratio also show a similar tendency. Furthermore benchmark return for February 2011 decline by 3.8 percent taking the year to date return in negative territory to 0.66 percent. Foreign investment was notable for its absence on the back of regional uncertainties caused by the Egyptian revolution. The turmoil in Egypt caused oil prices to soar, especially Arab light and Brent crude categories that trade around and above $100 per barrel mark.
Looking at individual stock performance, 78 percent of the index was dominated by negative performance while five percent were unchanged while the rest of the stock posted gains. Only a few prominent stocks including SSGC, EPCL and Unilever foods posted positive returns. All prominent stocks performed negativly irrespective of the sector.
