Karachi Stock Exchange Weekly Analysis 20 October, 2012

The Karachi Stock Exchange (KSE) market has witnessed a mixed movement in this week. KSE – 100 index closed at 15,792.75 points by gaining 98.54 points or 0.63 percent. While the KSE 30-share index has reached on 12,947.33 points by gaining 45 points or 0.34 percent. Average daily turnover was recorded at 120 million shares, up 3%WoW.

KSE has also modified the rules of the game by introducing free float based index. Now it would be difficult for punters and market heavy weights to manipulate the index returns. The index weights of high capitalized stocks with lower trading volumes were reduced substantially, hence changing the dynamics of the game. If you look at Nestle, OGDC and Colgate Palmolive you will realize the reduction in index weights. It is interesting to see from now on it would be difficult to maneuver the index with OGDC as the index weight was reduced by 40%. Hopefully the free float index would revive the investor confidence towards the index.

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

  • Foreign interest was also evident at the KSE with FIPI at US$ 6.4 million this week
  • As per the weekly oil price review mechanism, the government reduced petrol and CNG price by PRs2.09/litre and PRs1.92/kg respectively, while prices of diesel and kerosene were up by PRs3.16/litre and PRs1.92/liter effective October 15th
  • Pakistan will begin utilizing EU trade concessions awarded under Autonomous Trade Preferences (ATP) from Nov 1, 2012
  • AKBL among Banks gained 4.9%WoW on expectations of a tender offer post Fauji Foundation’s acquisition of AKBL
  • PTCL results dampen the market sentiment after declaration of hefty loss, but soon after investors realize the loss was largely on account of one time VSS cost
  • POL and MCB results were also lower in contrast with market expectation
  • FFBL results were fairly close to analyst estimates whereas exceptional dividend payout boosts the investor confidence towards the stock
  • During the outgoing week cement sector came back strongly largely on the back of result expectation. Results of Cherat Cement and Attock cement seems fairly encouraging which push other top tier cement stocks in action
  • FDI fell by 67% during the 1QFY13 mainly due to lack of foreign investors' interest owing to adverse law and order situation and deepening energy crisis
  • NCCPL has imposed PKR3/PKR100,000 as service charges on CGT calculation on share trading
  • Government of Pakistan is unable to arrange PKR57.018bn funding for import of 1000 MW electricity from Iran with the purpose to lessen the ongoing power crisis
  • NEPRA slashed KESC power tariff by 7 to 37 paisa/unit for 2MFY13 under the monthly fuel adjustment formula
  • Ministry has suggested long‐ and short‐ term solutions to resolve the issues faced by the fertilizer industry by proposing a detailed summary to the ECC
  • Pakistan has requested the ADB to act as lead financier for US$ 4.792 billion loan for the construction of Bhasha Dam project designed to generate 4500MW electricity and live water storage capacity of 6.4maf
  • ADB has hold back financing of US$ 1.14 billion for over 1,000MW coal‐based power plants if GoP continues to insist that these plants will run on Thar coal instead of imported coal 
  • The automobile sector offered 431 cars an average every day in FY12, showing an increase of 11% over the previous year, but business is expected to slow down during the current FY13

Result season continues next week and corporate earnings are likely to continue dominating investor sentiment. In this regard, mainboard companies that will announce results next week include FFC, KAPCO, LOTPTA, OGDC, BAFL, NBP, DGKC, LUCK, NML and PSO, among others. With Eid-ul-Azha around the corner, next week could potentially end on Thursday which may impact weekly volumes and potentially induce profit taking ahead of the long weekend. According to analysts, market is likely to remain active on the back of result season.

National Foods, Bata (Pakistan), Azgard Nine, Attock Refinery, DGKC, LUCKY Cement and Cherat Cement were the major gainers while Thal limited, TPL Trakker Ltd, Nishat (Chunian) Limited, Shifa Int Hospitals Ltd, Colgate Palmolive, BankIslami Pakistan, International Steels Ltd., SHEL, ENGRO, POL, PSO, HCAR and Hum Network Limited were major losers in the benchmark KSE-100 this week.

Top ten volume leaders were: PTC, FCCL, DGKC, JSCL, ANL, NML, AKBL, PGF, EFOODS and FFBL.

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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