Karachi Stock Exchange Weekly Analysis 9 December, 2012

The Karachi Stock Exchange (KSE) index movement was bullish, Ignoring FPI outflow (US$2.2mn), the market strode past technical hurdles and registered an all-time high closing on Thursday. The second- and third-tier stocks remained in the limelight. Sentiment at the local bourse remained positive during the outgoing week, where the second and the third tier stocks remained in the limelight. KSE – 100 index closed at 16,807.91 points by gaining 234.05 points or 1.41 percent. While KSE – 30 index has reached on 13,621.21 points by increment of 199 points or 1.49 percent. Average daily volumes dropped to 238.79 million shares, down 18.17%WoW. The weekly turnover rose 0.37 percent and traded 313.42 million shares as compared to previous week’s 312.25 million shares.

According to analysts, stock market would also perform well next week. Investors will likely eye the upcoming Monetary Policy Statement (MPS). In this regard, given recent CPI numbers, we expect a further cut in the discount rate by 50-100 bps. With squeezed interest margins for the Banking sector, the floor rate on PLS savings accounts for conventional banks is also widely expected to be reduced in the upcoming MPS. Should the floor rate be reduced, expect a strong performance from the Banking sector. Moreover, leveraged sectors such as Cements and Power are also likely to enter the fray. Higher global commodities and cement sales data, rising urea and DAP offtake for November and improved textile sector valuations on the export relaxation by the European Union played a catalyst role in the bullish sentiment.

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

  • State Bank of Pakistan likely to face difficulties in taking MPS decision, On the one hand, the Government of Pakistan is eager to lower inflation and bring down the interest rate to a single‐digit to gain sympathies of the people in the next general elections
  • Encouraging cement offtake numbers for Nov’12. And a commitment by the US to provide US$ 200 million to finance the Diamer Bhasha Dam (positive for the Cement sector)
  • Consumption of Pakistani cement in India is thinning out with total cement exports to the latter from the former standing at 183,387tonnes in the 5MFY13, down 38.5% compared with 298,214tonnes in the corresponding period last year
  • A statement by Dr. Hafeez Sheikh that the US will soon disburse US$ 500 million to US$ 600 million in lieu of CSF payment due to Pakistan
  • OGRA had given a proposal to the govt. to approve PRs31.12/mmbtu increase in gas prices effective 1st January 2013 to meet the revenue requirement for gas utilities. The proposed hike implied 9.87% hike in gas prices for all domestic and industrial consumers for Jan‐Jul 2013
  • Ministry of Petroleum & Natural Resources would be putting forward a plan to the ECC for the gradual phase out of the CNG industry
  • PTA withdrew its Sep 25th directive for establishing an International Clearing House (ICH) in the wake of Lahore High Court order where a petition was filed. Under ICH, all incoming international traffic had to be handled through a centralized gateway, which was to be operated and maintained by PTCL, which would be a negative news for telecom sector 
  • The government was considering to approve gas supply plan dedicated for four fertilizer plants on SNGPL network including EnVen, Dawood Hercules, Pak Arab and Agritech
  • APTMA raised concerns against possible increase in duty on Polysester Synthetic Fiber (PSF) imports. Local PSF manufacturers increasing their product prices in anticipation of imposition of 10.5% duty on imports
  • On macro front, forex reserves fell to US$13.5bn and CPI for November clocked in at 6.9%YoY
  • Government of Pakistan appears to have decided to gradually do away with the CNG industry. Under the plan, which has been hammered out by top mandarins, vehicles of more than 800cc will be barred from using CNG as fuel

Grays of Cambridge., Lotte Pakistan PTA, PICIC Growth Fund, Bank of Khyber, Sui South Gas, Faisal Bank, Netsol, MCB, Pak.Int.Con  and Colgate Palmolive were the major gainers while Shifa Int Hospitals Ltd, Feroze1888, Bankislami Pakistan, National Foods and Agriauto Ind were major losers in the benchmark KSE-100 this week.

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

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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