Karachi stock market awaits a positive trigger

Karachi stocks were subdued last week, lacking clear direction as the benchmark 100-share index see-sawed in and out of the red but investors still hope some positive news provides a catalyst to buy stocks and leave the market's recent weakness in the dust.
Dealers said the recent across the board correction may entice value seekers if reports of crackdown on big brokers die down but rare support from global markets is expected because the calendar turned to October.
Analyst Faizan Ahmed at JS Global Capital said market witnessed a range-bound week ended October 2, 2015 amidst a flurry of negative news and weak sentiments.
“But with SECP’s clarification regarding ongoing proceedings against some brokers may help alleviate concerns and inject some euphoria into the market,” Ahmed said.
The KSE-100 shares index gained 0.44 percent, or 146.89 points, to close the week at 32,969.73 points. KSE-30 shares index gained 0.57 percent or 113.22 points to end at 19,774.72 points.
Foreign institutional flows turned positive this week clocking in at $0.221 million compared with an outflow of $1.1 million previous week.
Average trading volumes jumped significantly by 43 percent to 178 million shares/day.
Index recovered in the last three trading sessions of the week, propelled by a surprise CPI of 1.3 percent for September 2015.
Arif Habib Limited, in its market note, said the regulator’s clarification on probe against some big brokerage houses helped quell investors' fears and also boosted the sentiment in the latter half of the week.
“Also, CPI (Consumer Price Index inflation) numbers for September were well below market consensus,” the report said. “Stock market chatter suggested speculations of yet another rate cut due to low inflation readings persisting.”
The CPI inflation for September 2015 clocked in at 1.32 percent y-o-y compared to 1.72 percent in August 2015.
Investors attempting to determine whether the market will rebound sharply from its current dullness or sink a little will look toward central bank for another rate cut for a clearer picture of the economy.
A research report issued by KASB Securities highlighted successful issue of $500mn 3-year Eurobond over the weekend.
Moreover, IMF Board approved the release of ninth tranche of $505 million, as the government managed to get two waivers for its June-end targets, on budget deficit and government borrowing. Finally, $375 million installment under coalition support fund was received by end of this week, shoring up the country’s Forex reserves to over $20 billion.
On political front, Pakistan and India however continued to use harsh rhetoric for each other, and this time at United Nations’ platform Islamabad claimed to have evidence showing India’s sponsoring terrorism in the country.