Lackluster trading continues at KSE (04092008)

LEADER REPORT
KARACHI: Market continued its depressive tone while trades remained dull on Wednesday, as investors, both local and foreign, opted to refrain from the market. The temporary support provided to avoid further corrosion of the market has been welcomed by investors but with feeble interest.
KSE-100 index registered minor gains of 9.6 points (0.1%) when it closed at 9239 levels before seeing a high of 9241 points. Volumes remained in the lower band as only 12mn shares were traded across the board. Advance to decline ratio favored the bulls while 111 companies retained their values out of 205 actives.
Continuous outflow of Foreign Portfolio Investments has been witnessed during the past few months with net selling of PKR25.36 by foreign investors was recorded on Tuesday. This ongoing flow of investments from the securities market has resulted in shaken investor confidence and down grading rupee value. Only 5mn shares (PKR390mn) were traded in the CFS Mk II, while the net open volumes stood at 284mn shares valued at PKR18bn on Sept 2nd, while 36mn shares were traded the day before, however, declining interest in leveraged investments by participants was witnessed.
Oil sector remained stagnant as all E&P scrips, OGDC, PPL and POL maintained their earlier positions primarily due to the Int'l oil prices which eased on Wednesday as they touched a low USD105 before closing at USD108. However, earning potentials of oil companies owing primarily to the increased inventory gains resulting from high oil prices. The sector is expected to remain the driving force for the index in long term.
Power sector saw selling pressure owing to increasing circular debt as large power companies are unable to pay their respective dues, causing oil companies to show their inability to ensure smooth supplies while IPPs are currently running less than their capacity, thus causing power crisis in the country.
Investors are recommended to remain cautious and adopt wait & see strategy in the short run as Presidential Elections date approaching fast. This event if defines the existence of one party rule, could bring some steadiness. In long term perspective, scrips of major sectors may remain attractive while index is being traded at discount levels at PE of 8.4x posing high upside for investors.