Corporate results, political situation to steer KSE movement

Inflows of corporate results and political situational will set the direction of the city’s prime stock index in the coming sessions; strong numbers are expected to pique interest in cements while energy scrip are to reap benefit from recovery in international oil prices, analysts said.
Foreign fund selling and political uncertainty prevailed on trading during the last week as the benchmark Karachi Stock Exchange (KSE) 100-share Index cumulatively lost 2.1 percent, or 713 points, to finish at 33,943 points.
Analyst Raheel Ashraf at JS Research said political discomfort ahead of senate elections scheduled on 5 March fueled the bullish sentiments. Total net foreign selling was recorded at $10.3 million.
Auto sector remained in the limelight as industry’s sales in January 2015 expanded by 29 percent year on year and 60 percent month on month.
One analyst at KASB Securities said with most of the results in fertiliser, exploration and production and banks on their way, the market focus is likely to shift to cement companies expected to unveil strong earnings.
“Sustainability of rebound in oil prices is still being viewed skeptically given the mixed data release on drilling rig count and inventories,” he said.
Concerns of potential impairment loss have led to three percent week on week drop in Engro’s stock price despite robust figures in one of its major subsidiaries, Engro Fertilizers and positive updates on liquefied natural gas project.
“We remain strong advocate of investment in exploration and production sector,” said the analyst.
“We are selectively positive on banks, fertilisers and refineries.”
Average daily volume declined by 17 percent to 272 million shares against 328 million shares in the preceding week and value traded per day fell 16.4 percent week on week to $164 million.
Other key highlights of the week were government announcing Rs65 billion textile policy (2014-19), US releasing $700 million for Pakistan under the coalition support fund (CSF) taking the country’s foreign exchange reserves to $16 billion, and oil consumption growing by seven percent year on year in January.
The measures announced in the textile policy fell short of expectations and hence activity in the textile stocks was muted.
On external account front, latest data on trade account and remittances coupled with hefty inflow under the head of CSF raised the possibility of current account turning into positive in both January and February, the KASB analyst said.
Jahangir Siddiqui and Co, Attock Cement, Atlas Honda, Attock Petroleum and Pakistan Oilfields were the major gainers, while IGI Insurance, Cherat Cement, Hum Network Limited, Jubilee General Insurance and Pak Services were the major losers in the benchmark KSE-100 during the last week.