Karachi Stock Exchange Weekly Analysis 8 September, 2012

The Karachi Stock Exchange (KSE) market has witnessed a bullish trend. KSE – 100 index has reached 15,254 points by losing 137 points or 0.9 percent. While the KSE 30-share index has reached on 13,034.11 points by declining 195.82 points or 1.48 percent. The expected correction in the last week has restricted the index for further upward movement. Currently the investors are cheerful and a little fearful as well, because of rampant bullish movement. Overall market remained under pressure as investors opted to book profits in blue chips after healthy gains of the prior week.

KSE index marked was geared up by the oil and gas sector initially, later it was the cement sector, and now it’s the telecom sector fueling the bullish energy.

“The KSE 100-share index will consolidate around 15,000 points level next week,” said Naeem Rafi, chief executive officer of Rafi Securities, adding that with the end of the corporate results season, the next week may invite some technical selling if the market would not get a fresh buying trigger.

Average daily traded volumes were also lower by 21.9% WoW at 195.4mn shares. There was a marked slowdown in foreign inflows with cumulative FIPI of US$ 0.25 million compared with last week’s net inflow of US$ 7.7 million.

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

  • PTA’s approval for formation of ICH and ECC notifying de‐regulation of HSD prices were some of the important developments this week
  • Other major highlights during the week included, finalisation of the fiscal deficit figure by the Ministry of Finance, decline in Treasury bills yields and release of cement sales numbers by the All Pakistan Cement Manufacturers Association (APCMA) 
  • Political atmosphere would get charged again once the NRO case resumes on September 18 
  • The banking sector lagged behind the rest of the market largely due to reduction in banking spread and the inflation numbers
  • Pakistan-IMF meetings are scheduled towards the end of the month on post-programme monitoring, whereby the fund will conduct its internal assessment on the Pakistan’s repayment capacity 
  • Analysts are expected 50 bps cut in basic interest rate once again, as reflected in the last T-bill auction
  • ENGRO and SHEL Pakistan have came back after kissing the much lowest levels
  • SHEL Pakistan has increased +14.7% during the week on increase in margins on HSD post deregulation of HSD import parity pricing
  • Establishment of ICH continued to boost investor confidence in telecom stocks including PTC, TELE and WTL
  • DGKC is scheduled to announce its financial results on 10 September, 2012. Nice earnings, EPS and dividend is expected because of better prevailing retention prices, reduction in financial cost, decline in long term debt and attrition in fuel & energy cost. In additional domestic demand in the northern part of the country improved by 8.4%YoY benefited the company due to it presence in the region
  • Dera Ghazi Khan Cement (DGKC) and Lucky Cement underperformed the market by 3.5 percent and 0.9 percent, respectively on the back of weak cement sales figures in August (down 18.6 percent on monthly basis) 
  • PTC and POL are also schedule to announce results in next week and after these announcements, results season would virtually get over. These results may drive the market in positive direction
  • Government has reduced the age limit of used cars import from 5 to 4 years. Which has boosted the local auto sector scrips e.g. HCAR and INDU
  • Government of Pakistan has decided to seek financing from China for the mega US$ 13 billion Bhasha Dam with power production capacity of 4,500 MW and also take loans from domestic banks by offering guarantees
  • National Assembly was informed that work on Iran‐Pakistan gas pipeline project is expected to start by December this year, while gas flow would be available by the end of December 2014
  • OGDCL has discovered a new hydrocarbon‐bearing horizon from its appraisal well Nashpa‐III, located in District Karak. Reportedly, the company found two new producing formations with combined production of 3,165bpd of oil and 15mmcfd of gas. Nashpa III would have PRs0.53/sh and PRs0.81/sh impact on OGDC (56% stake) and PPL (26% stake) respectively
  • The closure of 5‐fertilizer plants in the country owing to gas curtailment has resulted in a huge shortfall of 0.654mn tones urea and the shortage is going to be fulfilled through imports
  • FFC has completed the country’s first Wind Energy Farm at Jhimpir, district Thatta. FFC has assured its complete and withstanding commitment to the uplift and wellbeing of underprivileged communities around the project. 50 MW wind energy farm has been completed in a record time 

Grays Of Cambridge, NetSol Technologies, Shifa Int Hospitals Ltd, Shell Pakistan, Indus Motors, Unilever Pakistan, International Steels, Pak Tobacco, Media Times and P.T.C.L. were the major gainers while Atlas Honda, P.I.A.C. (A), National Refinery, Philip Morris Pak Ltd (LAKST), Packages Ltd., Abbot Labortories, Pakistan Cables, Allied Bank, FFBL, Agritech Ltd., and NIB Bank were major losers in the benchmark KSE-100 this week.

Top ten volume leaders were: ABOT, AICL, AGL, AGTL, ABL, AHCL, AKBL, ATLH, ACPL, APL.

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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