State Bank's delay in Monetary policy and Karachi Stock Exhange

I was constantly watching KSE throughout the last week. I have found that at the start of last week till Thursday (23rd July, 2009) KSE index was going up by leaps and bounds. The reasons were same as I have already described in detail in my last postings. State Bank was supposed to announce Monetary policy on 25th July, 2009. According to experts in this policy there were expectations of a significant cut in discount rate. And there were also some other positive reasons for the raise of index graph e.g. Board of directors at KSE has taken a decision to re-launch of deliverable future contracts in 10 stocks, and then they have increased the number of eligible stocks from 10 to 18. Nice reports and corporate results of major listed companies were arriving and also expected. National Investment Trust (NIT) has announced dividend at Rs. 3.05 per unit for its Letter of Credit (LoC) holders. FFBL and EPCL were also the main companies who have announced their results last week. And UBL, Engro and FFC are the major companies which will be announcing their financials in the coming week. And hopefully their positive reports, EPS etc. are expected to lead to short term rallies. 2nd Instalment from IMF is expected. Foreign investment in Banks, Oil and Gas companies and foreign currency exchange have increased.

Because of these reasons market was seemed to be bullish and its index graph was constantly going up. DG Cement, JS companies, Fauji Cement, OGDC, Bank Al-Falah, AZGARD NINE, PTCL, AdamJee Insurance etc. were doing good business. On Thursday (23rd July, 2009) market was closed at 7863.86 points, which is a record, psychological, 2nd highest level in this year (7902.48 highest recorded on 20th April, 2009).

But on Friday (24th July, 2009) State Bank has suddenly announced an extraordinary delay in announcement of Monetary Policy till 15 August, 2009 for the next quarter of the year in progress. This news has imposed a very negative impact in market. Investors were made curious, cautious and confused. Buyers were seemed to be not interested in any further buying. And investors were trying to sell their shares and were trying to be on safe side, because of next week’s downfall. They have sell out shares of Cement, Telecom, Oil & Gas Sector etc. in massive amount. This has caused KSE index to move on 7783.40 after 80.46 negative points.
So friends, this upcoming week we are expecting very volatile conditions and a rapid flux in market. Be careful in any investment until the situation comes clear and a positive news, announcement etc. arrives from SBP and government.

Written by: Rana Khurram

NOTE: The information posted in this blog (forum) is based on current afairs & invstors point of view. There may be discrepency in the ground realities

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