Political strains and global economic uncertainty kept investor sentiments down as the KSE-100 index ended virtually flat, gaining only 36 points (+0.3% WoW). This is despite healthy corporate returns which failed to stir investors at the start of the week. However, attractive valuations finally lured investors during the last trading session of the week. As a result, average daily volume declined 12.6% WoW to stand at 75 million shares. Foreigners remained net sellers of ~USD 8million as the global debt crisis takes its toll on European countries. This was largely the key driver of lackluster market performance during the start of the week as profit taking activity was generally observed. However, with growing consensus and agreement over the $1.4 trillion bailout package, investor confidence seemed revitalised as seen by the sharp uptick in regional markets as well. This, coupled with strong news flows regarding sectoral performance and better than expected corporate results, strengthened investor confidence as the index saw a substantial 278 point jump (+2.47%) during the final trading session. This was also reflected in increased activity in the futures market.
Corporate results seemed healthier than anticipated for most companies. On the back of higher retention prices and higher dispatches during 1QFY12, LUCK posted earnings growth of 107% QoQ, slightly above analyst expectations. Banking sector heavyweights MCB and UBL posted strong profitability growth of 24% and 36% on a YoY basis respectively for 9M2011. However, NBP – impacted by rising npl’s – reported a flat bottom line. The results of FFBL were announced which exceeded expectations considerably as earning growth came out to be 145% higher YoY. This is primarily owing to the exponential rise in DAP prices seen during the period, supported somewhat by marginally higher volumes despite gas shortages. As a result of gas loadshedding, fertiliser stocks continued to be in the limelight, however, performed relatively better than other sectors.
The final trading session of the day indicated the presence of strong support levels which entice investors to buy securities offering attractive valuations. This trend is expected to be seen in the coming week as well driven by the continuity of corporate results as popular script entities such as FFC, ENGRO, NCL, KESC, and ANL are scheduled to announce their results in the coming week. Assessment of flood damage to cotton crop is also likely to be released shortly. Again fertiliser stocks are expected to be in the main fray. The results of FFC and ENGRO are considered important in this regard as they may carry indications about the severity of gas load shedding experienced by the sector during the period. Furthermore, with seemingly positive sentiments arising in global equity markets, the trend of net foreign selling – which has continued for several weeks – may be expected to seize, at least in the upcoming sessions.
