Karachi Stock Market Weekend Analysis September 06, 2009

After the recent bull run, KSE – 100 index has breached 9,000 points psychological level and closed on 9,002.68 after increment of 185.08 points at 2.10 percent, on the last Friday. Remember it is the highest level achieved by KSE – 100 during this year (2009). In the last week market has gained 461 points (Market closed on 8,541.22 last week) 5.4 percent on weekly basis. Remember KSE – 100 index has gained 11 percent in last two weeks. And KSE-30 index closed at 9,651.15 with a gain of 186.96 points.

The reasons for such a rise in market are:

  • Massive foreign investment in Banking, Oil & Gas Sectors. In last two weeks foreign activity was 13 percent of total volume of Karachi bourse
  • Paying ability of Pakistani market has improved after the IMF additional funding. Successful issuance of Rs 90 billion TFCs will improve financial health of various listed companies starting from oil exploration, refinery and IPP’s
  • Upward revision in sovereign credit rating of Pakistan by world renowned Standard & Poor’s (S&P) to “B-”
  • Discovery of new crude Oil and Gas reserves by OGDC. And Positive earnings outlook in oil exploration companies
  • Current corporate result season, and companies are announcing positive reports, bonuses, dividends etc. and also good reports are expected in upcoming week
  • Local investors have also invested Oil & Gas, Bank, Cement, Telecomm, Securities etc. for the profit-taking/selling with this bull run
  • Rise in cement price
  • Continuation of rebates on export refinance rates for textile sector
There is news circulating in market that if foreign investment will continue in Oil, Banks and fertilizer sectors etc. then market can touch 10,000 psychological level till Eid.

PPTA, OGDC, PTCL, DGKC, NBP, AZGARD NINE, Bank Al-Falah and Arif Habib were on top last week.

But friends be careful in this and subsequent weeks, market can be volatile. Before any investment keep in mind the following factors also:

Current result season is drawing towards end
Increase in retail prices of Petrol and Electricity in coming months
Increased political friction between PPP and MQM with PML (N) is a latent threat
A key trigger for the market will now be the Friends of Democratic Pakistan meeting in NY on 23rd September, 2009. This will be co-charied by President Obama, PM Gordon Brown with expectations of grants.

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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