Karachi Stock Exchange Weekly Analysis 15 September, 2012

The Karachi Stock Exchange (KSE) market has witnessed a bullish trend. KSE – 100 index has reached 15,450 points by gaining 196 points or 1.3 percent. While the KSE 30-share index has reached on 13,073.12 points by increment of 39 points or 0.30 percent. Please note that KSE – 100 index has reached highest level since last 53 months after April, 2008.

KSE – 100 index has gained with average daily volumes of 164 million shares. Foreign interest was intact as foreigners were net buyers of US$ 2.7 million. Trading activity was yet again dominated by the Telecom sector on the back of ICH-related euphoria.

The Karachi Stock Exchange’s (KSE) benchmark 100-index is expected go well above the 15,500 points level successfully next week as foreign investors are likely to invest more funds at the bourse after the US Federal Reserve announced a stimulus package for its economy.

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

  • SBP (State Bank of Pakistan) has cut 150 bps in export finance scheme rates to provide some relief to export oriented sectors. This bodes well for the textile sector, where we hiked FY13 EPS for NCL by 12% and NML by 3%. NML and NCL this week outperformed the market by 6.0% and 3.7%, respectively
  • EU will import (approval by EU parliament of the Autonomous Trade Preferences - ATP package) more duty free products from Pakistan. It would be applicable on 75 types of goods and largely comprising of textile products
  • Fed’s decision to launch a third aggressive stimulus program to rescue the US economy. And the announcement of QE3 by the US Fed yesterday cheered global equity markets with positive momentum likely to continue in the next week 
  • Pakistan’s trade deficit declined by 0.44 percent on year-on-year in two months of ongoing fiscal year 2013
  • With ICH (International Clearing House) agreement signed, which is going to be implementing the International Incoming calls for long distance, fixed‐line local loops, and wireless local loops in October, 2012. PTC seems to be having a substantial improvement in earnings outlook. The one way move of PTC was finally stopped after the company announced its financial results with no cash payout
  • Government of Pakistan has finally approved the issuance of PPTFCs of PKR 82 billion by PHPL. OGDC has subscribed to the above TFCs to settle its overdue receivables from oil refineries and gas companies
  • OGDC has gained Rs. 8.34 per share or 4.8 percent. Which has added approximately 181 points on index
  • BOD meeting of POL, APL and NML is expected on 15 September. And nice results, earnings are expected
  • EFOODS and HUBCO performance can be attributed to profit booking by investors
  • Banking sector seems to be impacted by cut in discount rate in the recent past and raise in minimum deposit return
  • Moody’s Investor Service maintained negative outlook on Pakistan’s banking system mainly due to heavy placement in GoP owned securities. Resultantly, the banking sector underperformed the market by 2.0%WoW 
  • Finally FBR issued an SRO in relation with CGT where NCCPL will debit the respective investors for their due share of CGT by September 18, 2012. Investors are likely to feel the pinch of CGT for the first time after the announcement of automated CGT regime
  • According to SNGPL, Punjab will face the brunt of gas shortage during this winter season as the demand for gas demand will rise to an unprecedented level
  • SECP (Securities Exchange Commission of Pakistan) has proposed the merger of ISE and LSE
  • E&P sector is also likely to be in the limelight in the coming week on higher oil prices
  • Government of Pakistan has increased the price of HSD by PKR3.39/litre, kerosene oil by PKR1.85/litre, HOBC by PKR3.27/litre and LSD by 87 paisa/ litre as well as it reduced the prices of petrol by PKR4.65/litre and CNG in the range of PKR3.89‐4.27/kg
  • Government of Pakistan determined to steer Pakistan Steel Mills to profitability and expansion with a concrete technical and financial plan. So that the proposal can be taken up during the forthcoming visit of Vladimir Putin
  • Pakistan and Russia are expected to sign agreements on currency swap and opening of bank branches during the Putin's visit to Pakistan
  • If there is a breakthrough, Pakistan and Russia could sign a deal to award IP gas pipeline project to Russian energy giant Gazprom during the upcoming visit of Russia President
  • Chinese Premier reiterated the stance of his government of supporting the sovereignty and integrity of Pakistan when he met Prime Minister Ashraf here on the sidelines of World Economic Forum's
  • Russia has also been requested to invest in a 500MW power project (on coal) at Jamshoro at an estimated cost of US$ 700 million
  • ADB (Asian Development Bank) will provide loan of US$ 433 millions to Pakistan for Guddu, Jamshoro thermal plants to be run on coal
  • Japan has agreed to provide machinery and equipment worth US$ 4 billion for the Diamer Bhasha Dam. Japan had agreed to cooperate in extending the power generation capacity of the Mangla dam
  • Sales of locally produced cars fell by 28.2% to 18,325 units in 2MFY13 as compared to 25,553 units in the same period of last fiscal year. The huge influx of used cars is not only hurting the local automobile industry but also causing substantial losses to the national exchequer
  • Cement exports have been increased by 18.23% as about 545,125 metric tonnes cement worth US$ 46.197 million exported during the month of July, 2012

P.I.A.C. (A), Pak Cables, K.E.S.C., NetSol Technologies, Media Times Limited, Siemens Pak, PACE Pak, NIB Bank, Nishat Mills, Nishat (Chunian) Ltd., OGDC, Lafarge Pakistan Cement Ltd., Maple Leaf Cement, Indus Motor Company Ltd., Allied Bank Ltd., Sui Southern Gas, PSO, Kot Addu Power and Thal Ltd. were the major gainers.

While Ghani Glass, PICIC Growth Fund, Shell Pakistan, P.T.C.L., Engro Polymer, Al-Ghazi Tractors, Engro Foods, International Steels, Bestway Cement, and HUBCO were major losers in the benchmark KSE-100 this Week.

Top ten volume leaders were: PACE, KAPCO, PKGS, DAWH, NPL, JDWS, ENGRO, HUBCO, SSGC and EFOODS.

Next week also plays host to resumption in the government judiciary tussle as the NRO hearing is scheduled for 18th Sep and ongoing discussions for finalizing caretaker setup will keep the noise factor elevated.

The Federal Board of Revenue (FBR) issued the much‐awaited CGT Rules on Securities’ Trading on 12th Sep, incorporating all amendments proposed by the SECP aimed at facilitating the investors. The SECP had recommended certain changes in the CGT rules for documentary trail of undocumented income, correction of anomaly where exempted gains in past were not documented, improving depth in trading volumes, higher possibility for privatization and attraction of foreign portfolio investment. After approval of rules, the CGT regime has reportedly become effective.

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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