KARACHI – Aggressive buying was witnessed in the energy sector as oil prices continued their upward trend and traded above $105 per barrel owing to supply concerns in the Middle East led by the unrest in Libya. Announcement of forward cover on FX contracts by the central bank gave the much needed comfort to local business houses. The KSE-100 index managed to close at a level of 11,564, up 76 points with 63 million shares traded today. Foreign institutional investors were rumored to be buyers in cement and energy while locals were buyers in energy and fertilizer sectors. The KSE 100 index closed at 11,564.25 adding 76.19 points while total volume stood at 46,308,072 along with the total value of 3,191,126,540.
The benchmark inched upwards in the second consecutive session as trading commenced on positive note. Again top shelf securities drew investor’s interest as NBP, POL, LUCK, HUBC and FFBL were amongst volume leaders. Overall investor participation remained subdued across segments as leverage products have even failed to ignite retail interest. Merely 63 million shares were traded in the trading session. Local investors eagerly await monetary policy statement for the next two months, to be announced over the weekend. It seems foreign investors’ interest at the local bourse is likely to set the trend in intermediate term.
Rising oil and fertiliser prices (although highly inflationary and a clear threat for fragile economy) got the anticipated reaction at the local bourse, fertiliser, oil and banking stocks led the early run-up; thus allowing the benchmark to enter and sustain positive numbers, while accumulation on dips in dividend yielding and various growth stocks, mainly from the corporate circuits kept panic selling away, at least for the day. The likely roll-over pressure amid low turnover was apparently another factor that supported the argument for patience with regards to an increase in discounts for cherry picking.
The volatile security situation, and other pressing financial matters, threat of food scarcity despite improved wheat crops, along with tense regional situation did restrict accumulation on strength, as the majority of prospective accumulators awaited steep fall for aggressive accumulation.
Consistent accumulation amid low volatility or extreme declines will allow local participants to use the newly introduced leverage product to establish fresh positions, thus inviting improved turnover, an increase in market depth and reactivation of price discovery machine is expected to increase number of participants. CGT implementation and a recent increase in taxes and its impact on inflationary numbers has been a cause for concern to both equity and economic stakeholders.
Selective and calculative portfolio building up both for trading and investment should therefore be the strategy, liquid stocks having fundamental backing, low impact cost and availability at low multiples are therefore recommended, said Hasnain Asghar Ali at Aziz Fidahusein.
