Sideways trading for KSE expected after eid holidays; focus shifts to probes

KARACHI: Stocks may show resilience if investors find triggers sufficient enough to induce buying in next five sessions after Eid holidays; although an expected global market’s rout and the brokers’ probe outcome is likely to dampen sentiments, analysts said.
Karachi stocks witnessed quite a lackluster short week ended 23 September.
“The market observed a somber activity this week due to absence of triggers. Market corrected 5.5 percent during September so far. Improving macro [economic indicators] and expanding regional discounts make Pakistan equities a compelling investment case,” an analyst at Arif Habib Limited said.
The benchmark Karachi Stock Exchange (KSE) 100-share Index gained 61.89 points, or 0.19 percent, to close the week at 32,822.84 points. KSE 30-share Index shed 44.12 points, or 0.22 percent, to end at 19,661.50 points.
The market remained dull in a shortened trading week as upcoming Eid Holidays negatively impacted volumes. An average daily turnover was down 8.0 percent to 124 million per day. On the overseas front, foreign portfolio investment numbers for the week showed a net selling of $1.1 million.
“Foreign investors remained bullish on banks during the week, while selling was seen in the chemicals sector,” a report issued by Arif Habib Limited said.
Analyst Faizan Ahmed at JS Global said lack of triggers kept market volatile.
“Lack of optimism due to fears of NAB’s (National Accountability Bureau) investigations against high profile industrialists and brokers continued to hamper market performance despite upbeat corporate valuations,” Ahmed said.
The market continued to move sideways with global pessimism and thin volumes dampening the mood. The previous was also the futures rollover week.
In the local market, the only cheerful news was the earnings by DG Khan Cement, which set forth a rally in other cement stocks; but it was short-lived.
Major news this week revolved around the broader economic landscape, with current account deficit recorded at 0.8 percent of gross domestic product for the first two months of the fiscal year 2015/16, compared to 3.2 percent in same period last year.
Textile exports rose 8.3 percent in August, despite lower cotton prices in the international market. Large scale manufacturing posted 4.7 percent growth in July 2015, compared to last year, with autos, fertilisers and chemicals among the top growing sectors.
The latest Asian Development Bank’s report painted a mixed picture of the economy, acknowledging the prospect of growth picking up to 4.5 percent.
“The market is facing a chronic shortage of major positive news to rescue it out of the present volatility and pessimism. News flows on the rumored investigation is eagerly awaited by the investors. Post Eid, global market rout is expected to persist because of weak Chinese data released this week,” said a report issued by KASB Securities.