Profit-booking halts market’s upward march (26072008)

LEADER REPORT
KARACHI: The awaiting market support fund was launched on Friday through NIT, while it was not seen active in the market.
The market opened on a positive note, while from the mid session volatility was witnessed, and at the end, index closed after shedding 125 points respecting the 11,000 level at 11,032 points.
The pressure experienced was mainly as it was the end of the rollover week, profit-booking by local investors and the continuous selling by foreign investors. This decline can be seen as a healthy correction for the market, after the gain of almost 1,000 points in the last sessions.
The international oil prices continue to decline and stood at 125 per barrel. This is beneficial for the country but not a good sign for the E&P sector. The foreign outflow continues as in the last session an outflow of USD 3 million was witnessed in foreign portfolio investment. The heavy outflow from capital markets and import payments has brought the country's reserves down by USD 102 million to USD 10.728 billion. The news floating in the market Maybank is considering raising its stake in MCB bank by 5 percent, which is a positive development which will bring foreign inflow to slightly support the country's foreign reserves.
The major pressure was experienced by the E&P sector, which may be a technical correction as investors prefer to book their profits at the end of the week or the selling may be due to the fall in international oil prices, while the sector still remains fundamentally strong due to the expectation of growth in the financial results.
The bullish banking scrips continued their performance in the start, majority hit their upper circuits, while at the end selling pressure was experienced and slight declines were witnessed. The financial result of ENGRO was announced EPS of 8.04 and 20% cash dividend which was slightly below expectation, as a result the scrip witnessed heavy selling pressure.
The outlook of the market seems to be positive, as the market is present at attractive level, the upcoming results of the blue chips with positive expectation and the activation of support fund which is expected from the next session onward will maintain the bullish activity. Other than the political, economic and law & order situation, the major threat to the capital market is the monetary policy. While the market has discounted the impact of further increase in discount rate to an extent. Investors are advised to invest in oil, fertilizer, cement and banking sector.