Karachi Stock Exchange Weekly Analysis 6 May, 2012

The Karachi Stock Exchange (KSE) market has witnessed a bullish movement during the week. KSE – 100 index has reached 14,612.28 points by gaining 570 points or 4.1 percent. Please note that it is the highest level achieved since May 5, 2008. Volumes also showed marginal improvement with Friday alone volumes reached to Rs 10 billion, which is a 15-month high. From a broader perspective, our end-Dec’12 Index target has been upped to 16,000 points.

The weekly turnover appreciated by 70.86 percent and traded 335.16 million shares as against the previous week’s 196.15 million shares.

According to Pakistan Bureau of Statistics (PBS), consumer price index (CPI) clocked in at 11.3 percent for April 2012 as against 10.84 percent last month. The cumulative CPI figure for July-April stood at 10.84 percent. Hence full year inflation is expected to remain below the budgetary target of 12 percent. Moreover, the country’s foreign exchange reserves rose to $16.43 billion in the week ending on April 27, from $16.42 billion of the previous week. Furthermore, the rupee continued to slide against the US dollar and dropped to an all-time low of Rs91.07 per dollar.

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

  • Aggressive Foreign buying has moved KSE index to positive direction. They bought shares worth $33 million, while the KSE also outperformed the regional markets by 3.0 percent
  • There are expectations of favourable federal budget announcement for the corporate sector and improvement in Pak-US relations
  • Cotton arrivals as of April 30, 2012, stood at a record of 14.8 million bales, up 26 percent on yearly basis
  • Opposition parties are launching protest across the country, demanding resignation of Prime minister
  • The Ministry of Petroleum and Natural Resources opposed a proposal for divestment of shares of Pakistan Petroleum Limited (PPL) at a discounted price, citing PPL as a healthy and profitable commercial enterprise
  • POL prices kept unchanged, LDO rates lowered
  • MOI (Ministry of Industries) rejects the proposal to buy urea from local producers
  • Reduction of 50% in ST on raw material imports proposed
  • Government fetched Rs155bn through T-bills, yields unchanged
  • NEPRA notifies Rs6.4/unit power tariff hike under fuel adjustment

Engro Foods, Pakistan Telecommunication Company Ltd (PTCL) and Dera Ghazi Khan Cement (DGKC) were among the outperformers this week. The fertiliser sector also performed well, with Fatima Fertilizer and Engro Corporation climbing by 12.4% and 7.5% respectively.

Media Times Limited, PTCL, Ibrahim Fibers, Al‐Ghazi Tractors and IGI Insurance were the major gainers while Javedan Corporation, Grays of Cambridge, Tandlianwala Sugar, Nishat Chun Power and Pak Cables were major losers last week.

The top-5 scrips at the futures counter holding 61% of the total open interest were ENGRO, DGKC, NBP, LUCK and ATRL.

Experts and analysts are recommending an accumulation stance on PPL, APL, PSO, OGDC, POL, Hubco and NCPL (our top picks in the energy chain). Our liking also extends to FFC, FFBL, PSMC, ICI, Lucky, DGKC and PTC where robust business models and strong fundamentals make these names a worthwhile play, while MCB continues to remain our preferred play in the banking space.

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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