Volumes plunge by 39 per cent

KARACHI: The Karachi share market, which witnessed dull trading during the week ended on March 23 with average daily volumes plunging by 39 per cent, is likely to remain under pressure next week as even results of blue-chip companies failed to generate excitement due to various economic and tax-related issues, dealers said.

“With some key corporate announcements, including Oil and Gas Development Company and Pakistan Petroleum Limited due next week, we do not foresee any major activity unless foreign funds come back into the market,” said Sara Shahid, an analyst at Elixir Securities.

Since corporate results had failed to initiate buoyancy in the presence of a number of issues with the rising circular debt on top, the market movement would largely depend upon the behaviour of foreign fund managers, dealers said.

The outgoing week kicked off in anticipation of major corporate results announcement. However, despite strong results from Pakistan Oilfields, Pakistan State Oil and Habib Bank Limited, the market sentiment remained weak as the local bourse closed at 10,607 points down by 52 points, or 0.48 per cent. The KSE-30 Index closed at 10,726.80 points with a loss of 149.81 points, or 0.37 per cent.

Trading activity was minimal during the week as compared to the previous week, as the average daily ready market volume stood at 157.811 million shares as compared to 256.605 million shares last week.

“Selling pressure continued on renewed concerns over the rate and mechanism of capital gains tax on stock exchanges. Besides, investors preferred to book profits, despite good result announcements banking, textile sector companies,” said Ahsan Mehanti, Chief Executive Officer at Shahzad Chamdia Securities.

The two-day energy summit was another area of focal interest, which too, failed to hold the market interest for long.

“Initially, the capital market welcomed the energy conference headed by the prime minister and aimed at enhancing the structural capacity and resolution of the circular debt. However, despite the announcement to provide Rs116 billion against the debt by June 2010, doubts surfaced about the source of this inflow,” said Rabia Tariq, an analyst at JS Global Capital.

Results of major scrips like MCB Bank, PSO, HBL and POL were announced during the week. Though, these results were in line or above market expectation, but were unable to stimulate a rally at the bourse, she said.

Moreover, global concern over Goldman Sachs scam kept the investors a little apprehensive. With the corporate results season in full swing, heavyweights, including Engro, PTC, NBP, OGDC and PPL are scheduled to announce the results in the coming week.

“We believe this would set the tone for the next week’s market performance,” said Rabia.

Foreigners concluded to be net buyers of $16.5 million during the week. All local investors turned out as net sellers. Among the sellers, the predominant share was of banks, which offloaded holdings worth $7.6 million.

“Ongoing efforts to address the energy issues and to settle the circular debt will indeed reduce the nervousness. Materialisation, however, stays the key, since the issues are consolidating to turn out to be a big concern, mainly with the budget coming closer, reduction of some issues will be a relief for the stakeholders,” said Hasnain Asghar Ali, a dealer at Aziz Fida Husein.

Source The News