Equities closed with a bang with across the board activity edging past 8,100. Normally what was expected to be a dull day ahead of next week commencement of the Ramadan, where normally trading volumes shrink; came as an utter surprise to everyone. From a glance smaller banks witnessed decent volumes led by BAFL amid reports that Warid Telecom, the banks cellular arm, may well be bought out by Singtel or take management control, giving a one off earnings gain. Overall buying euphoria was induced after confirmation that country's reserves had touched USD13bn after receipt of funds from IMF, highest levels seen since October 2007. The change in macro economic situation coupled by sustained foreign fund inflows prompted locals to take long positions. Telecom giant PTC continued to outperform with talk of foreign buying, although we feel the stock has been underperforming, and probably buying was done by locals, who are betting on the company to announce another dividend.
The market will now re-open on Monday under Ramadan timings that will be shorter and given historical trends, lower volumes. However, with the introduction of a new leverage product for equity market commencing possibly next week, we foresee locals remaining long. The direction will also be very much dependent on FII flows, that will take the market to 8,400 levels.
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