Analysts suggest caution as KSE touches 9-month high

The outgoing week (February 06-09) is the seventh in sequence of closing the Karachi bourse on positive note. However, the process of much awaited technical correction was initiated on weekend.

KSE 100-Index moved ahead by another 255.01 points on week-on-week basis and closed above nine-month high record at 11,844.65 points despite of the bearish resistance it faced during week.

To calculate the future movement of the benchmark, it is worth mentioning here that 100-Index breached through 12,000 points on aggressive buying on Friday, but market failed to sustain this level. Corrections reversed the earlier gains after touching 12,047.72 points peak level this week.

Foreign investment in bourses declines

A 12 per cent decline has been registered in foreign portfolio investment in stock exchanges in just about one week, showing a withdrawal of $41 million through special convertible rupee account (SCRA).

According to data released by the State Bank of Pakistan (SBP), foreign investment now stands at $298.768 million, down from $320.593 million which was registered on November 7, 2006. A major withdrawal of investment was witnessed on November 7, when foreign investors mainly from the UK and the US resorted to net outflow of $20 million in one day due to variety of reasons.

Banks major attraction for foreign portfolio investors

The growing foreign interest in Pakistan’s developing economy, particularly in areas like banking and capital market, is well reflected in the Karachi Stock Exchange, which has been rising for the last couple of weeks.

This is primarily evident from the increased inflow of foreign portfolio investment into Special Convertible Rupee Account (SCRA) managed by the State Bank of Pakistan.

SBP figures pointed out that during the week ended on October 12, 2006, a massive inflow of US$13.5 million was recorded in the country’s stock markets.