Index recovers 138 points amid profit-taking (25072008)

LEADER REPORT
KARACHI: Market opened with a positive not on Thursday and went down in the mid session, but after a couple of short dips the index recovered and closed with a gain of 138 points at 11,157 points.
The major profit-taking was witnessed in oil and fertilizer sectors.
The volumes remained low, 144 million shares, as retail investors are still reluctant to invest.
The flight of foreign capital continued, the figures of the last session of foreign portfolio investment showed a net outflow of USD 10 million.
The shattered confidence of foreign investors seems not to be regaining, as continuous foreign selling has been witnessed. In the current situation, it will be a tough task for the government to regain the foreigners' confidence, as the country urgently needs foreign inflow to support its deteriorating macro economic indicators. The government should set up policies to attract the foreign investors.
The rupee showed a slight depreciation against USD, while against other currencies the depreciation was much higher. The transactions in the foreign currency have decreased due to the restriction by the SBP on forward contract and the limited timings, etc. The tight monetary policy does not seem to be affecting the banking sector, as the lending has grown by 11 percent in the first half. Majority of the extremely attractive valued banks were closed trading in their upper band.
Profit-taking was witnessed in the E&P sector, even after an announcement of OGDC of a discovery in Kunnar of around 200 barrels per day. The scrip did not seem to take any affect and closed in the negative zone. The other fundamentally strong sector, fertilizer, demonstrated a profit-taking session. ENGRO meeting is scheduled on Friday (today), while the result will be announced on Saturday. The scrip closed trading in its lower band.
The outlook of the market seems to be positive, as the market is present at attractive level, the results of the blue chips with positive expectation and the activation of support fund which is expected from Saturday will maintain the bullish activity. Other than the political, economic and law and 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, the investors are advised to invest in oil, fertilizer, cement and banking sectors.