Stocks ride high at the Karachi Stock Exchange

Friday was a fantastic day at the Karachi Stock Exchange. The result season has already started and some blue chip company is announcing its results every other day for the 4th quarter 2009. Expectations in the market are high right now as the 1st quarter 2010 may not be quite rosy for the investors due to the intense power crisis in the country and high interest rates.

The stocks to look out for seem to be the oil refineries (PRL, ATRL, NRL) and oil marketing companies (PSO, SHELL) with banks having an average quarter due to reports of the Non Performing Loans (NPL) keeping on increasing. Insurance companies and investment companies are also having a very tough time and what to say of the textile sector.

Government of Pakistan is to announce the Textile Policy in the coming days and there are expectations of a turnaround in the sector in the next 1 or 2 years provided the power crisis and law and order situation in the country come under control.

The Government has already announced that 2009-2010 would be the year of the industry and with the industrial policy to be announced in the next month we may see some improvement in the industry’s share in the GDP from the disappointing -7% progress in this year.

The rally at the stock exchange may go on till the result season is over so this seems to be the best time to make some profit.

4th quarter corporate results to be announced at the Karachi Stock Exchange

The fourth quarter ended on June 30 2009 and its that time of the year when corporates announce their financial results and shareholders anxiously wait for the amount of dividend that is going to be paid to them. The Karachi Stock Exchange is fluctuating in a specific range as the market is waiting for the quarterly monetary policy to be announced by the State Bank of Pakistan on July 25 2009 and the Trade Policy to be announced in the next week. More will however depend on how many basis points the State Bank of Pakistan cuts the interest rate. The market is expecting a 100 to 150 basis point cut.

There are strong indications that the interest rate will be cut however the exact number is not clear as Pakistan is bound by the IMF and has to keep its budget deficit and inflation in check. The recent cut in the interest rate of the National Savings Scheme also shows that the SBP will be cutting interest rates.

There is all possibility of a short to mid term rally in August 2009 if the interest rate is cut as per market expectations and there is sure profit to be made if leading shares are purchased at current levels. However, stranger things have happened and not all goes as expected so take a good look around and do your homework before buying any share.