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WEEKLY REVIEW: Positive developments take Karachi stocks 239 pts up

Staff Report

KARACHI: Bullish sentiments dominated the trading sessions during the week at the Karachi stock market on account of continued foreign interest in oil and gas exploration sector.

The Karachi Stock Exchange (KSE) 100-share index gained 239.19 points or 2.6 percent to close at 9,306.36 points as compared to 9,067.17 points of the previous week.

Analysts said that expectations of reduction in discount rate in the next monetary policy announcement on November 24 and rise in international oil prices near to $80 per barrel helped the market to remain bullish.

The turnover was recorded at 140.32 million shares as compared with 153.52 million shares of the previous week, reflecting an increase of 8.59 percent.

“The increase was predominantly led by improved economic indicators, expected interest rate cut and foreign buying,” said analyst at JS Research Rabia Tariq. “All eyes are now focused on November 24 monetary policy announcement.”

The State Bank of Pakistan had set on Tuesday November 24 as the release date of next monetary policy statement. With a 50-100 basis points decline anticipated by the industry experts supported by 5-31bps reduction in cut off T-bill rates, interest was revived in the market, she said and added that moreover, positive economic news flow such as 22.3 percent reduction in July-October (2009) trade deficit contributed to the improved investor confidence.

The E&P sector was the predominant performer this week posting returns of 6.4 percent on the back of news flow regarding the incremental oil and gas production from some of the oil and gas fields.

Renewed interest was witnessed in the textile sector, which was up 3.8 percent at the back of higher cotton arrivals and improved yarn export numbers. On the contrary, cement, fertilizer and banks underperformed the market.

Foreigners and mutual funds were among the major buyers as they bought shares worth $35.4 million and $32.5 million, while offloading shares worth $17.5 million and $28.1 million, respectively. Resultantly, they were net buyers of $17.9 million and $4.4 million, respectively. On the contrary, individuals and banks came out as net sellers, with cumulative net selling of $19 million.

“Positive activity was witnessed on stability in political situation, early introduction of leverage products in the market and impact of stronger valuations in the telecom sector,” said analyst at Shahzad Chamdia Sec Ahsan Mehanti.

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