Karachi Stock Exchange Weekly Analysis 6 October, 2012

The Karachi Stock Exchange (KSE) market movement was bullish. KSE – 100 index has reached 15,754.39 points by gaining 310 points or +2.00 percent. While the KSE 30-share index has reached on 13,213.86 points by gaining 184.42 points or 1.42 percent. In the process, the KSE-100 index also breached its all-time high of 15,676 points, achieved in April, 2008.

There was pickup in trading activity with average daily volumes of 134 million compared with 95 million last week.

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

  • SBP (State Bank of Pakistan) has announced a discount rate cut of 50bps in its MPS for October 2012. The rate cut came in at the lower end of the expectation range (50bps-100bps), where according to analysts the market will react negatively to the less than expected rate cut next week
  • The effectiveness of SBP's current monetary policy stance continues to weigh upon improvement in the fiscal position, better availability of energy, and an increase in foreign financial inflows
  • The KSE management announced that the benchmark KSE‐100 index would move to free float from the current market cap method effective Oct 15th 2012
  • Pakistan Bureau of Statistics (PBS) has recently revealed the inflation numbers for the month of September’12 where CPI clocked at 8.79%YoY whilst taking the 1QFY13 inflation to 9.14%
  • The textile sector was in vogue during the week, amid a string of announcements, where textile companies generally surprised with above line payouts
  • Cement sector scrips also witnessed brisk activity as expectations of rate cut as well as soft coal price outlook generated interest in the sector
  • Fertilizer stocks were back in action after FFBL bounced back from lower level on provisional offtake numbers were swirled amongst market participants
  • The oil sector was riding on the back of news related to discovery
  • Amid ongoing talks with IMF and power sector receivables touching a record PKR 487 billion, the government has released about PKR 82 billion to the power sector in the first quarter against an annual target of PKR 120 billion set for FY13, suggesting a slippage in achieving a 4.7% fiscal deficit limit
  • FBR has provisionally collected approximately PKR 403 billion during July - September FY13 against the quarterly target of PKR 43 billion, reflecting a massive shortfall of PKR 34 billion
  • PSMC raised the prices of its locally assembled cars and light commercial vehicles effective from October 1, dealers said. The new prices for Mehran VXR E2 are PKR632,000 up by PKR25,000. The total increase in the current year is PKR70,000 for this car
  • ADB has enhanced Pakistan's growth forecast for the year 2012 to 3.7 from 3.6% projected earlier
  • A declining interest rate environment should shift commercial banks' focus from investment in government securities and redirect their attention towards core banking activities
  • Government of Pakistan has released 5 billion rupees to cash strapped PSO which had requested PKR 17 billion to avert a default, a senior official of PSO said. National fuel supplying company was facing serious financial problems as its liabilities had once gain soared to PKR 150
  • ECC approves LNG import, sugar export. ECC of Cabinet has allowed immediate import of 200,000 tons of urea for Rabi season on a summary submitted by MoI
  • Pakistan likely to miss cotton target by 1.5 million bales because of a decrease in sowing area as well as flash floods in major crop production areas of Sindh and Punjab

Attock Refinery, Murree Brewery, Nestle Pakistan Limited, Packages Limited, NCL, SHEL, FFBL, and Sui Northern Gas Ltd were the major gainers while K.E.S.C., Silkbank Limited, Pak Services, NIB Bank, MEBL, UBL, HMB, BAFL, MCB and Rafhan Maize were major losers in the benchmark KSE‐100 this week.

NML was the volume leader this week (41.4 million shares) followed by LPCL (36.3 million shares) and PTC (28.1 million shares)

Top ten volume leaders were: NML, PTC, DGKC, JSCL, PACE, FCCL, KESC, FFBL, LOTPTA, and ENGRO.

The Cement and Textile sectors which could come in for some profit taking. However, according to analysts banks are ripe for a relief rally as margin compression concerns abate.

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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