Inflation data to influence KSE direction

Stock market will take cue from February inflation data next week, although the benchmark Karachi Stock Exchange (KSE) 100-share Index closed lower overall 1.1 percent during the last week due mainly to future contracts rollover, analysts said.
One analyst at KASB Securities said they expect consumer price index to ease to very low levels of 3.8 percent for Feb-15, which should generate hopes of a sharper than 50 basis points cut in discount rate in the March monetary policy announcement, and can trigger positive momentum at the bourse.
“Given that this week’s decline will be accompanied by low volumes,” he said. “Valuations have opened up and we suggest accumulation in fundamentally strong stocks.”
The benchmark 100-index decreased by 361 points, or 1.1 percent, week on week to 33,632 points as against 33,993 points in the preceding week. Average trading volume dropped by 19 percent to 172 million shares from 212 million shares, value traded per day fell 22 percent to $89 million. Foreign portfolio investment outflow was recorded at $9.6 million as compared to $9.3 million earlier.
The ongoing result season has failed to lend the much-needed spark to the market, lacking any significant earnings surprise with most of the major results announced.
Results were largely in line with the expectations (including results of Nishat Power Limited, Nishat Mills Limited, Nishat Chunian Power Limited, United Bank Limited and Bank Alfalah Limited) except a few, most notably National Bank Pakistan, which was marred by higher-than-expected provisioning. Positive stock/sector specific news was scant. Even flat-to-higher oil prices (Brent up further two percent since last Friday) did not infuse significant positivity in the market, said the KASB analyst.
One analyst said there was a lack of any trigger in the market, however, inflation data at the beginning of the new week might set pace the market’s pace.
Raheel Ashraf, an analyst at JS Research, said rollover of future contracts and net foreign selling of $9.6 million kept the investors sentiments bearish, despite strong corporate announcements this week.
Indus Motor (up 8.7 percent week on week) outperformed other scrip over the reports of potential buyback of shares by Toyota, while the cement sector remained subdued amid profit taking.
Other key highlights of the week were government eying financial closure of 10,400MW projects in March, large scale manufacturing expanding by 2.65 percent year on year in first half FY15, oil import bill cut by 53 percent year on year and 33 percent month on month in Jan-2015 and National Assembly body approving amended gas infrastructure development cess bill.
Indus Motors, Colgate Palmolive, Murree Brewery, Fauji Fertilizer Bin Qasim and Pakistan Tobacco Company were the major gainers, while Grays of Cambridge, Pace (Pak) Ltd, PakGen Power Ltd, Shezan International and Archroma Pakistan Ltd were the major losers in the benchmark KSE-100 during the last week.