Karachi shares end 2015 with gains but below peaks

KARACHI: Karachi stocks ended 2015 mostly higher than where they started, but well below their peaks after weak commodity prices and foreign selling weighed on market in the final quarter, analysts said.

They added that the sentiments remained positive during the week ended January 1, 2016, but trading remained low because of year end factor.

Fahas Qasim at Topline Securities said range bound activity was witnessed at the bourse and the benchmark KSE-100 index closed up 2.2 percent during the week.

The KSE-100 shares index gained 728.2 points or 2.24 percent to close the week at 33228.95 points. KSE-30 shares index gained 463.32 points or 2.42 percent to end at 19565.16 points.

Trading activity remained dull as volumes plunged by 37 percent due to low foreigner participation on account of holiday season, with average daily volume pegged at 114 million shares/day. Foreigners remained net sellers with $4.28 million worth of offloading during the week.

Faizan Ahmed at JS Global Capital said the prime minister's inauguration of CPEC's western route and impressive provisional sales numbers rekindled interest in cement stocks and the sector surged 5.7 percent during the week.

“Index heavyweight oil and gas stocks also recovered on news of 50 percent increase in Sui gas field's wellhead price and recent hydrocarbon discoveries”.

Oil prices remained broadly flat during the week on the back of holiday season in the international markets. The announcement of Rs3.0/unit cut in electricity tariff for the industrial sector from January 2016 by Prime Minister Nawaz Sharif got a thumb-up response from the market.

Analysts said the outlook on Engro’s gas supply extension from Mari field remains unclear as the ECC is yet to make a decision. Meanwhile latest update indicates the Ministry of Water and Power has objected to the extension and demanded it to be diverted back to Genco-2.

The Auto sector also awaits approval of the long-term auto policy, as assemblers hold their medium term investment plans of launching new vehicles till clarity on incentives package.

According to an analyst at KASB Securities macro dynamics continue to improve. A cut in petroleum product prices should ease CPI in coming months, while FBR tax collection exceeded its target by Rs20 billion to Rs770 billion, which should bode well with the IMF.

“Volumes are expected to improve going forward owing to the general optimism among investors (January-effect), post year-end blues,” a KASB Securities report noted. “Moreover, market is likely to take cue from macro developments and oil price direction, as the next deliberation between IMF and Pakistan authorities is due in the last week of January, to review the performance of the quarter ended December 2015”.