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WEEKLY REVIEW: NRO issue, security concerns drag KSE 220 points down

Staff Report

KARACHI: The Karachi stock market witnessed a bearish trading week due to the lingering issue of National Reconciliation Ordinance and precarious law and order situation in the country.

The Karachi Stock Exchange (KSE) 100-share index decreased by 219.74 points or 2.4 percent to close at 8,936.44 points as compared to 9,156.18 points of the previous week.

Analysts said that during the week intense selling pressure was witnessed on the back of limited foreign interest and uncertainty over Morgan Stanley Capital International November review decision on the stock market.

The turnover was recorded at 97.12 million shares as against 179.13 million shares of the previous week, reflecting a decline of 84.44 percent.

“The week started with worsening law and order situation in the country,” said analyst at JS Research Bilal Qamar. “In addition, heightened concerns and condemnation of NRO by major political parties kept the market under pressure.”

The issue of NRO remained at the forefront as all major political parties strongly opposed the ordinance. Moreover, MQM chief Altaf Hussain was alleged to have advised President Asif Ali Zardari to step down. Effects of the news were visible on the market, which shed 286 points on Monday.

Despite security concerns, foreigners offloaded shares worth $13.6 million and bought shares worth $20.2 millionn. In contrast, banks, individuals and companies remained on the selling side as they sold net shares worth $5.0 million, $3.7 million and $1.4 million, respectively. Moreover, mutual funds continued their selling as they were the net sellers of $0.5 million.

Fertilizer and E&P sectors outperformed the market however; their market capitalisation fell by only 0.6 percent and 1.6 percent, respectively. Higher oil prices and news regarding additional gas supply from Manzalai kept investors interested in the E&P sector while Engro was the preferred stock in the fertilizer sector as its market capitalisation grew by 3.2 percent.

“Investors remained concerned over ongoing political uncertainty, prevailing NRO issue and security situation in the country,” said analyst at Shahzad Chamdia Sec Ahsan Mehanti. “However, post result announcements consolidation prevailed throughout the week.”

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