Karachi Stock Exchange Weekly Analysis 31 August, 2012

The Karachi Stock Exchange (KSE) market has witnessed a bullish trend. KSE – 100 index has reached 15,392 points by gaining 352 points or 2.3 percent. While the KSE 30-share index has gain 369.88 points, or 2.88 percent and reached on 13,229.93.

Average daily volumes declined by 6.9%WoW to 250 million shares. Foreigners were net buyers of US$ 7.7 million during the week. On the macro front, CPI for August clocked in at 9.05%YoY.

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

  • Supreme Court has provided time to PM form contempt of court case, Investors are cautious about the decision
  • Unveiling of the new petroleum policy 2012, which bodes well for the exploration sector and healthy payouts in E&P sector, has encouraged investors
  • New Oil and Gas prices have been implemented in country with the hike of almost 5%
  • The ministry of Petroleum and Natural Resource has finally unveiled the much awaited petroleum policy, however with less glitter than earlier anticipated
  • GoP enhances wellhead gas prices for E&P companies: GoP announced increase in consumer gas price by up to 100 % in one year. The enhanced wellhead gas price for E&P companies from existing $4/ mmbtu to $6‐$9/ mmbtu
  • After the completion of Zamazama gas field's ATA, a total of 190 MMCFD gas has been added into the SNGPL system of which 80 MMCFD is diverted to power sector
  • SBP(State Bank of Pakistan) made a repayment of US$ 397.2 million to the IMF) on Friday
  • In response to the recent cut in discount rate by SBP, Profits in NSS (National Saving Schemes) have been decreased. According to the Notification new rates for SSC, Regular Income Certificate, DSC and Savings Accounts has been fixed at 10.8%, 11.04%, 11.5% and 7.40%, respectively
  • SBP turned down MCB’s request for banking operations in India
  • Pakistan and India, during the deliberations, will also touch issues of LNG pricing and transport facility. India was planning to expand its pipeline network for shipment of LNG across the border. India has agreed in principle to provide 200mmcfd LNG to Pakistan through Wagah border for a period of 5 to 7 years
  • PSO is facing turbulent situation as its receivables have once again rose to the alarming level of PKR 46 billionn as on August 28, 2012
  • PTCL was the poster boy of the week, accounting for 11% of total volumes and pushed forward by 18% WoW over reports that PTA was in the process of establishing International Clearing House (ICH) and raising ASR for LDI operators despite CCP voicing reservations in this regard 
  • This week’s volume leaders were PTC (cumulative 133mn shares), TELE and WTL – indicating the quantum of interest in the Telecom sector on the proposed ICH implementation
  • Pakistan’s public debt has increased by 105% since 2008 to touch PKR 12.392 trillion at the end of June 30 2012, exceeding a limit imposed by the parliament that it should not at any stage go beyond 60% of overall size of the economy
  • Refinery sales increased 6% to 697,000 tons in July 2012 although volatility in international oil prices continued to induce volatility in domestic operations
  • According to the National Fertilizer Development Centre (NFDC) urea offtake declined by 19%YoY while DAP dipped by 23%YoY in July. Moreover, govt. has reportedly issued a tender for the import of 300k tons of urea at US$399/ton CFR, which may dent local urea offtake and the pricing power of local producers in the near term 
  • With June 2012 result season still ongoing, certain big ticket names such as POL, APL, DGKC and NML still have to unveil their results

Bata (Pakistan), PACE, MDTL, ABOT, ICI, SIEM, SHFA, Atlas Honda, P.T.C.L., Nishat Chunian, ENGRO, NIB Bank Ltd., National Refinery Ltd., EFOODS, HUBCO, MCB, NBP, Pakistan Tobacco, Ghani Glass Ltd., Pak Services, MARI Gas, Dawood Hercules, Pak Cables and Media Times Limited were the major gainers while Jahangir Siddiqui & Co, KESC, Meezan Bank, EFU Life Insurance, IGI Insurance, Bestway Cement, Colgate Palmolive, Indus Dyeing, Soneri Bank, GLAXO, BAFL, UBL, FABL, TRIPF, LOTPTA, FATIMA and MEBL were major losers in the benchmark KSE-100 this week.

Top volume leaders of last week were: PTC, TELE, WTL, FCCL, and JSCL.

Our top picks at the moment include PPL, APL, PSO, OGDC, POL, Hubco and NCPL in the energy sector. Among banks MCB is our preferred play while Lucky Cement also deserves a closer look given favorable operating dynamics and upside potential. Among textiles, NML attracts our bias given its vertically integrated operations while we retain Fatima as our preferred exposure in the troubled fertilizer sector.

Thank you very much for reading this article.

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

Written by: Rana Khurram

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