KSE likely to maintain positive momentum

KARACHI: The Karachi Stock Exchange maintained bull-run during the outgoing week, as the KSE-100 Index hit an all-time high to close above 32,000 points, amid low inflation numbers, while the market is likely to continue positive momentum next week, analysts said on Saturday.
Raheel Ashraf, an analyst at JS Research, said: “Soft CPI inflation at 4.3 percent on year-on-year basis for December 2014 boosted the sentiment, as investors’ eye a discount rate cut in the upcoming monetary policy statement scheduled to be announced this month,” he said.
Cement and fertiliser sectors led the rally on strong earnings outlook for October-December 2014 quarter, while pharmaceuticals lagged behind due to the proposed drug policy.
The benchmark 100-Index increased by 738 points, or 2.3 percent, on week-on-week basis to 32,731 points against 31,993 points last week. Average daily volume rose by 3.4 percent to 232 million shares per day against 225 million shares.
Foreign portfolio investment witnessed outflows of $15 million as compared to the inflows of $7.8 million last week.
The week carried on the optimism from previous week with major activity in cement stocks.
The market expects a discount rate cut after the CPI clocked in at 4.3 percent in December 2014.
An analyst at KASB Securities said they reiterate their view of market re?rating on the back of improved political atmosphere, a positive macroeconomic environment and the government’s focus on key reform agenda across-the-board.
“We believe the market is keenly awaiting the monetary policy statement with having already priced in a 50bps discount rate cut; however, a cut higher than that will be taken as a surprise and set another rally,” he said.
Other key highlights of the week included decline in urea sales by 15 percent on year-on-year basis in November 2014, reduction in petroleum products prices by Rs6.25 to Rs14.14 per litre, collection of tax revenue by the Federal Board of Revenue rising by 12 percent on year-on-year basis in 1HFY15 and signing of a memorandum of understanding between Attock Cement and K-Electric Limited to setup a 40MW coal-fired power plant.
An analyst report of Elixir Securities said after rallying 3.2 percent last week, the benchmark index posted stellar gain of 2.3 percent during the current week, touching the all-time high.
Improving macro outlook on the back of higher foreign exchange reserves and weak CPI numbers for the month of December 14 primarily kept the market players exited.
Index heavyweight MCB Bank Limited alone contributed 102 points to the index, while Lucky Cement, Engro Corporation, Fauji Cement Company Limited and National Foods collectively added 210 points during the week.
Engro Fertilizer, National Foods Limited, EFU Life Assurance, Engro Foods Limited and Fauji Cement Company were the major gainers and rose 15.3 percent, 14 percent, 13.3 percent, 13.2 percent and 12.7 percent on week-on-week basis, respectively, while Pak Suzuki Motors, JDW Sugar, Sui Southern Gas Company, Searle Pakistan and Abbot Laboratories were the major losers in the benchmark KSE-100 this week.