Upbeat sentiment lifts MSM index

13/11/2010 00:00 AST

Unlike some economies in the region, the Sultanate has been on a steady growth path so is the Muscat Securities Market. The benchmark MSM 30 Index gained 41.84 points last week to close at 6620.55. During the week, the market saw improved sentiments with the services and insurance sector registering a rise of 11.83 points while industry sector gained 47 points. The banking and investment sector suffered minor losses. The bourse is expected to remain in the green amidst dull trading activity seen ahead of the long holidays. The performance of index heavyweights is likely to have a say on the index direction in the near term. Good buying was seen in select front line counters like BankMuscat and Renaissance Services.

Volumes showed substantial improvement during the week on the back of positive global cues, corporate earnings and higher oil prices. The rally was more off stocks specific in nature with the announcement of Q3 2010 corporate earnings. Although, the new entrant Nawras led the market in turnover and volume, it did not make much gains so far. The IPO was the first ever offer in Oman using the book-building method, which determined the share price of the offering based on actual demand from institutional investors.

According to Ajeev Gopinathan, Vice-President of Asset Management, Gulf Baader Capital Markets, the Muscat Securities Market is expected to retain the positive sentiments among global equities and improve local fundamentals. Yet, trading activity is expected to remain low this month due to upcoming holidays. “Oman as part of the region forms an attractive destination among frontier markets. As emerging market rally continues in the globe, we expect frontier markets also to attract foreign interest.

The region now looks set to be a second-round beneficiary of very easy US monetary policy”, he said. Earnings visibility and healthy cash flows along with reasonable valuations place Omani equities as value buying opportunity, he said, adding, the latest quantitative easing measures taken by Fed could see further increased allocation by foreigners in the emerging and frontier markets, he said.

In October, the services and insurance sector continued its upward rally and reported an increase of 6.6 per cent lead by strong performance of Renaissance Services and OIFC. Port Services also gained by about 14 per cent during the month. Mixed corporate earnings kept the market momentum going on as the total traded volume continued to register increase on a month-on-month basis. Regarding market participation, Omani and foreign investors emerged as net buyers. On the contrary, GCC investors emerged as net sellers.

“Fears of contagion from any debt crisis from any corner of the world is unlikely to affect the performance of the market thanks to the strong economic fundamentals in the country”, Ajeev said. With Oman Government announcing big ticket infrastructure projects in the coming months, companies like Galfar is confident of regaining its market share by securing more contracts.

Oman Daily Observer