Karachi Stock Exchange Weekly Analysis 15 December, 2012

The Karachi Stock Exchange (KSE) index movement was very cautious because of monetary policy. KSE – 100 index closed at 16,845.09 points by gaining 37.18 points or 0.2 percent. Average volumes plunging by 43%WoW to 136mn shares. On a net basis foreigners remained net sellers of US$ 3.8 million this week. The market moved in a range of 200‐odd points and on a WoW basis was up 0.2%. In-line with expectations, SBP cut policy rate by 50bps after market close on Friday.

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

  • State Bank of Pakistan (SBP) opted to cut the discount rate (DR) by 50bps on Friday to 9.5%. This is the first time since July 2007 that the DR has come down to single digits, largely due to soft YTD CPI inflation
  • The fertilizer factories operating in the SNGPL system have been facing severe gas outages and received less than 50% gas supplies in the 11MCY12 against last year. A sub‐committee of ECC has turned down a plan to spend USD400mn from GIDC on gas supply to the struggling fertilizer firms and has instead come up with a revised plan
  • LSM (Large Scale Manufacturing) growth coming in at 1.95% in 4MFY13 
  • Trade deficit decreasing by 20%YoY in November 2012
  • Local auto sales dipping by 3%MoM in November 2012
  • Overseas Pakistanis remitted US$ 5.98 billion in 5MFY13
  • Investors remained bullish in cement stocks on expectations for healthy earnings for the quarter while Pakistan Telecommunications Company Ltd and Lotte Pakistan PTA were also on the investors’ radar on development on the telecom front
  • The Economic Coordination Committee of the Cabinet’s approval of new pricing for Qadirpur gas field brought some fresh buying in Oil and Gas Development Company as well
  • Amid financial crunch due to circular debt, PPL has decided to buy out assets of Ireland‐based private group Tullow Oil located in Pakistan and Bangladesh. ECC in principle approved Pakistan Petroleum Limited (PPL)’s bid for the Tullow Pakistan Development Limited and Tullow Bangladesh Limited, subject to the approval by the State Bank of Pakistan
  • Chinese demand for Pakistani cotton has increased and will benefit the Pakistani textile sector in near future
  • MoF has decided that SSGC LPG Company, PSO, OGDC and PPL will inject equity of USD15mn each into the LNG project
  • Locally‐manufactured car sales, including LCVs, vans and jeeps during registered a decline of 31% to 49,092 units during 5MFY13 has compared to 70,727 units
  • MoC notified the reduction in age limit of old and used cars imported under special schemes by the overseas Pakistanis from 5 years to 3 years

Pak. Int. Cont. Terminal Ltd., Hum Network Limited, Nishat (Chunian) Limited, PICIC Growth Fund, Glaxo, Nishat Chunian Power, Grays of Cambridge, Colgate Palmolive, Nishat Power, and E.F.U. Life Assurance were the major gainers while Feroz 1888 Mills Ltd., Pak Services, Azgard Nine, Bata Pakistan, Sui Northern Gas Ltd, Lotte Pakistan PTA, Pakistan Cables, Thal Ltd., Netsol Technologies, and Sui South Gas were major losers in the benchmark KSE-100 this week.

50bps cut was largely expected, however banks could face near-term headwinds owing to anxiety over spread compression which could be exacerbated by the SBP omitting mention of minimum deposit rate in the MPS statement. Leveraged plays (textiles, cements, fertilizers) meanwhile could see some excitement.

Top ten volume leaders were: LOTPTA, JSCL, FCCL, SNGP, KESC, PTC, DGKC, NCL, ENGRO and ANL.

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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