Karachi Stock Exchange Weekly Analysis 8 April, 2012

The Karachi Stock Exchange (KSE) market has witnessed a bullish trend. KSE – 100 index has reached 13,875.53 points by gaining 113.77 points or 0.82 percent, and is just 124.47 points away from 14,000 points crucial level. The benchmark index managed to test 14,000 points crucial level in the weekend session after almost 4 years(since 16 May, 2008). Late profit-selling, however, dragged the index down to the closing level. While KSE – 30 index has reached 12,183.37 points by gaining 69.24 points or 0.57 percent.

The average daily turnover improved by five percent to 387 million shares during the outgoing week. The market capitalisation surged by Rs37 billion to Rs3,565 billion. On the contrary, foreigners sold net shares worth $1.6 million in the week.

Following news have played vital role in Karachi Stock Market index movement:

  • The KSE is believed to advance the buying rally ahead of the financial results for the quarter ended on March 31
  • Capital gains tax (CGT) SRO/Presidential Ordinance would remain the key to unlock further values
  • According to experts banking sector would lead the buying rally on the back of seemingly robust earnings for the March-end quarter
  • Cement stocks would also extend their heartiest support to the advancing index, as investors would continue to buy such stocks on the back of rise in the commodity prices and sales volumes in the local market. Cement stocks remained in the limelight on the back of increase in export price to Afghanistan and expectations of healthy earnings
  • Petroleum prices raised by 4‐6%
  • Profit rates on National Saving Schemes (NSS) raised
  • CPI inflation eases to 10.8% in Mar‐12
  • Cotton production hits all‐time high of 14.67mn bales
  • As soon as Pakistan opens NATO supplies, the United States would reimburse $1.5 billion to Pakistan under the Coalition Support Fund (CSF), which will be good for the economy and for the stocks, as well
  • Restoration of gas supply to Engro Corp’s new plant also kept the stock in the investors’ radar. While lower-than-expected inflation numbers for March did not have any impact on the market sentiments
  • Amongst macro indicators, CPI for the month of Mar-12 stood below 11% to 10.79% YoY excluding recent jump in petroleum prices (4%-8%)
  • FBR to cut corporate tax rate to 32% in budget FY13
  • FBR to increase tax on Banks by 5% to 40% in budget FY13
  • Byco Refinery has been approved a 7-year tax holiday
  • HSBC decides to quit its business from Pakistan

BYCO Petroleum, Engro Polymer, Standard Chartered Bank, Pace (Pak) Ltd, and Lucky Cement were the major gainers while Pak Cables, Philip Morris Pak, NIB Bank, Ghani Glass and P.I.A.C. were major losers last week.

The top-5 scrips at the futures counter holding 67% of the total open interest were ENGRO, DGKC, NBP , LUCK and AHCL.

From an investment perspective, we maintain our bullish stance towards the energy chain with PPL, APL, PSO, OGDC, POL, Hubco, and NCPL are our preferred picks. We also believe FCCL, ENGRO, FFBL, FFC, NBP, DGKC, Lucky, DGKC and PTC warrant a closer look as they offer a combination of inexpensive valuations, healthy upside potentials and double‐digit dividend yields at current levels.

NOTE: The information posted in this blog (forum) is based on current afairs & invstors point of view. There may be discrepancy in the ground realities.

Written by: Rana Khurram

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