Karachi Stock Exchange Weekly Analysis 1 December, 2012

The Karachi Stock Exchange (KSE) index has continued its upward momentum and tested fresh highs as FPIs offer  tailwinds. KSE – 100 index closed at 16,573.86 points by gaining 336 points or 2.07 percent. While KSE – 30 index has reached on 13,421.81 points by increment of 250 points or 1.90 percent. According to analysts, stock market would also perform well next week as banking, cement and oil companies are already performing well, while it is likely that the fertilizer sector also come in the limelight. In anticipation of lower inflation for the month of November and further monetary easing, the market maintained the bull-run.

Average daily volumes showed a significant rise this week clocking in at 291.8 million shares (+15.5%WoW) while net FIPI inflow stood at US$ 6.7 million, up by 17%WoW from previous week’s net inflow of US$ 5.7million. Pakistan-US ties also eased, which provided support to the KSE-100 index which surged to an all-time high of 16,574 points. The rally was also enjoyed by foreign investors, which injected $6.7 million in the exchange, while volumes improved further by 16 percent on a week-on-week basis. Investors remained bullish in cement stocks, while textile sector also joined the bandwagon, as investors were hoping better earnings of the sectors amid better margins.

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

  • Pakistan banking spreads has reached at their lowest point since June 2005. Banking spreads a key determinant for Pakistan banks’ core earnings stood at average 7.11%, down 54bps versus 7.65% during the same period last year
  • PSMC likely to be allowed to import Euro-II compliant parts from India which would allow the company to resume manufacturing of Alto
  • T-bill auction where cut-off yields were largely flat (+1bps to +5bps) with participation skewed towards the 6M tenor leading market to firm expectations of at least 50bps cut in Discount Rate (+ve for leveraged sectors, cements and textiles in particular)
  • Unilever Overseas holding, the parent company of ULEVER deciding to voluntary delist from KSE
  • Lahore High Court ordering the GoP to start construction on the Kalabagh dam (+ve for cements)
  • FBR has finalized a 3‐Year Strategic Plan with lucrative incentives like ample reduction in sales tax rate from 16 to 10%; corporate income tax 35 to 30% while tax rate for AOPs and individuals would be brought down to a lower level 
  • With the objective of providing subsidy to fertilizer industry, it was proposed to the ECC of Cabinet to reduce sales tax rate on fertilizer from existing 16 to 11.3% and reduce GDS by PKR68/mmbtu

Grays Of Cambridge., Bata (Pakistan), K.E.S.C., Engro Foods Limited, Nishat Power Limited, JSCL, Netsol, Cherat Cement, Packages Ltd. and Pak. Int.Cont. Ter. Ltd. were the major gainers while Pak Cables, Pace (Pak) Ltd, Kohinoor Energy, Allied Rental Modaraba, Indus Motors, IGI Insurance, Faysal Bank, Nishat Chunian, Clariant Pakistan and Pak Suzuki Motors were major losers in the benchmark KSE-100 this week.

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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