Karachi Stock Exchange Weekly Analysis 27 October, 2012

The Karachi Stock Exchange (KSE) market has witnessed a consolidation before the long weekend and reached new highs by maintaining upward momentum. The week was mostly dominated by corporate results, which influenced stock specific movements. KSE – 100 index closed at 15,812.72 points by gaining 19.97 points or 0.13 percent. While the KSE 30-share index has reached on 12,927.19 points by losing 20.14 points or -0.16 percent.

Average daily volumes improving to 133 million shares, up 31% WoW. Foreigners showed interest in the market, with net buying worth US$ 5.5 million during the week. A slew of major blue chip companies announced corporate results for the Jul-Sep 2012 period during the week, with cement and textile sector dominating on improved YoY earnings.

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

  • The fertilizer sector remained in the limelight due to the government’s plans regarding gas allocation and urea import, during the last week
  • ECC in principal agreed to lay down 1000km pipeline for 4 fertilizer plants. Government has rejected short term gas supply plan for fertilizer plants
  • US opposition over the ICH mechanism, as well as Suspension of International Clearing House (ICH) mechanism by the Lahore High Court on the last day of the week put telecom major PTC under pressure, which slid down 9.2% WoW
  • Result sentiments mostly dominated with leading names (FFC, Lucky, DGKC, NBP, NML,INDU & PSMC) unveiling their quarterly score‐cards, however payouts were thin
  • LOTPTA posted weaker than expected 3Q12 earnings. LOTPTA also plans to invest US$ 20 million to modernize PTA plant to save conversion cost
  • Lucky Cement along with the group companies made a tender offer to the public for acquisition of 12.09% stake or 11.169 million shares of ICI Pakistan at an offer price of PRs 186.42
  • Pakistan’s export of textile and clothing rebounded in Sep’12 after witnessing a slump for at least one year, mainly owing to a slight surge in demand from recession‐hit key markets of Europe and United States. More importantly yarn exports rose by 40.8%YoY/28.3%MoM
  • The management of Pakistan Steel Mills (PSM) would request the federal government to release another PKR 5 billion so that consistency in production could be maintained
  • Supreme Court (SC) questioned the formula under which OGRA linked the price of domestic CNG with imported petrol on a weekly basis. Issuing notices to MD of SNGPL and SSGCL in oil pricing case, a two‐judge bench sought from Chairman OGRA a report on the formula used for gas pricing. And SC has ordered to reduce the CNG prices in country.
  • Russia and China appear to be losing the race for the US$ 1.5 billion IP gas pipeline project as Islamabad and Tehran have agreed to sign a US$ 250 million loan agreement next month for laying Pakistan’s portion of the pipeline
  • ATRL and Hyundai Engineering Company, Korea agreed to enter into a contract on engineering, procurement for up‐gradation project. The agreement includes the establishment of a preflight unit for ATRL refinery, which will help to enhance refining capacity by 10,400 bpd of oil, a naphtha isomerisation unit to increase production of premium motor gasoline by 20,000 tons/ month

Kohinoor Energy, Clariant Pak, Nishat Chunian Ltd, J.D.W Sugar, Pakistan Tobacco Company, Bata Pakistan Ltd., Fatima Fertilizer, EFU General Insu, Faysal Bank and K.E.S.C. were the major gainers while Allied Rental Modaraba, Tri-Pack Films, P.T.C.L., Lafarge Pakistan Cement Ltd, NIB Bank, Nishat Power Ltd., Pak Suzuki Motors, Packages Limited, Unilever Pakistan and International Steel Limited were major losers in the benchmark KSE-100 this week.

Top ten volume leaders were: DGKC, JSCL, PKGS, KESC, PACE, PTC, ANL, EFOODS, FATIMA and NML.

Result season would continue into the next week where key announcements would include UBL, HBL, ENGRO and PPL. On the macroeconomic front, market will keep a close eye on the CPI reading for Oct’12, which could come in below 8%YoY, further strengthening street expectations of a rate cut.

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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