KARACHI – The index performance, on most occasions, showed bullish momentum as it appreciated by 333 points, with an average daily volume of 78 million shares. The volume, on Tuesday, reached 110 million, while market exhibited lower volumes in the rest of week. Majority of the top tier stocks were tilted towards positive prices appreciation especially banks and cement sector, while index heavy OGDC moved against the wind. We believe that the quarterly result season, expected to commence shortly, is likely to boost investor sentiment, said Bilal Asif at HMFS. The SBP announced the monetary policy statement for April and May, where it kept the principle lending rate intact at 14 percent, inline with market consensus expectation.
The gradual reduction in inflationary pressure was pivotal to the unaltered rate. The SBP is likely to maintain the discount rate at current levels, largely due the reduced inflationary pressure – triggered by the base year effect. If the monthly inflation stays in the range of 1.1 percent and 1.2 percent for rest of the year, year-end inflation would be around 14 percent to 14.25 percent. In a recent move, the government raised petroleum product prices by nine to 13 percent, while, in absolute terms, HSD prices underwent the largest increase. Therefore, it is fair to assume an incremental inflationary pressure in the newly started month.
Furthermore, a monthly two percent hike in energy prices is expected, while circular debt continues to swell as the government has failed to find a long lasting solution.
The stock market is expected to move on the back of result expectation for the quarter; hence good results would allow investors to actively participate in the market. The stock market, with a return of 4.61 percent, regained some strength during March 2011 – which reduced the negative return of 8.66 percent, posted in February 2011.
The average daily volume, at 100.5 million shares, remains lackluster compared to the preceding month’s volume of 95.6 million shares. The index breached the 12,000 level during March, 2011; however, latter selling pressure restricted the upward movement to 11,809 points. Persistent foreign selling continued to impact the benchmark performance, as ample selling was seen on March 10, 2011 – where foreigners sold equities worth $7.3 million, depleting the index by a mere 2.36 points. Furthermore, selling of $8.96 million on March 18, 2011 turned on the bearish mood as the index lost 251 points in a single day. Finally, MTS was made available to investors by mid of March. However, leverage products were unable to spur investments.
