Karachi Stock Exchange Weekly Analysis 16 February, 2013

The Karachi Stock Exchange (KSE) benchmark movement was bullish and continued its push towards 18,000 points this week, driven mainly by incoming results. Sentiments in the market were mixed, driven by results, while intraday volatility remained high. KSE – 100 index closed at 17,797.22 points by gaining 319.28 points or 1.83 percent, while KSE – 30 index has reached on 14,562.79 by gaining of 311.64 points or 2.19 percent.

Volumes improved compared to the previous week as the average daily volumes clocked in at 270mn shares, an increase of 3.15%WoW, with volumes once again led by the Telecom sector. Investor focus was skewed towards the Telecom (+9%WoW), Auto (+6.1%WoW) and Oil & Gas (+4.7%WoW) sectors. Because of anticipation of robust Dec-12 results from telecom giant PTC, on which the company delivered, sharp 52%MoM recovery in domestic auto sales in Jan 2013 and rumors of an increase in marketing margins for OMCs as well as higher international oil prices.

According to analysts, foreign interest and result announcements are likely to continue supporting the bull-run. Results from telecom, banking, and exploration and production sectors are still pouring in. However, he said, when elections will come closer the market may take breathing space. Any news on political front can upset sentiments of investors. Oil companies saw interest levels picking up owing to proposed hike in marketing margins on certain products.

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

  • A slew of positive earnings announcements as Oct-Dec 2012 result season unfolded where DGKC, HBL, KESC, SNGP, PTC and ABL announced their results. And continued foreign interest at the local bourse, have moved KSE index into positive direction 
  • The hearing and subsequent dismissal of the petition by Dr. Tahir-Ul-Qadri by the SC challenging the composition of the ECP
  • The Swiss government declined to re-open cases against President Zardari
  • Negotiations between the Government, OGRA, OMCs and petroleum dealers regarding increase in margins of OMCs and dealers
  • BoP concerns with the IMF repayment of US$145mn at the start of the week causing PkR/US$ parity to weaken further
  • Foreign buyers bought $10.8 million of stocks last week
  • Concerns on Pak Rupee exchange rate (Pakistan made a US$146mn repayment to the IMF this week) and high DPS (Rs2.0) announcement by its subsidiary Nishat Chunian Power Ltd, put Nishat Chunian Ltd in a sweet spot
  • SBP over the weekend decided to keep the discount rate unchanged
  • SBP overnight reporate has been increased from 6.50% to 7.00%pa. This will serve as the 'floor' for the interest rate corridor. Floor and ceiling levels for the interest rate corridor will be 7.00% and 9.50% p.a. respectively, with a difference of 250bps as compared to 300bps previously 
  • Fauji Foundation along with Fauji Fertilizer (FFC) and Fauji Bin Qasim (FFBL) formed a consortium to acquire 51% strategic stake of Askari Bank from AWT at a price of PRs24.32/sh
  • OGDCL has converted third party workers on daily wages
  • Urea consignment of some 27,500tons, imported by TCP from SABIC under the credit facility, has reached Gwadar Port
  • PSO is likely to get PKR10bn from GoP to avert crisis of oil supplies operations on temporary basis. GoP instructed SBP to disburse an amount to PSO however the amount did not transfer to the accounts
  • Heavy buying was seen in OGDC that closed above Rs200 levels for the first time
  • Extraordinary corporate results of PTCL on realization of international call revenue invited interest in the scrip and other telecom sector stocks
  • Engro Corp and DGKC result remained below expectations

National Foods, NetSol Technologies, Nishat (Chunian) Limited, Pak Services, Nishat Power Ltd., IGI Insurance, Packages Limited, Nishat Chunian Power, Indus Motors and P.T.C.L.A were the major gainers while K.E.S.C., Sui Southern Gas, Bankislami Pakistan, Azgard Nine, ICI Pakistan, EFU General Insurance, Allied Bank, JS Bank, TPL Tracker and Bank Al-Habib were major losers in the benchmark KSE-100 this week.

Top ten volume leaders were: PTC, FCCL, JSCL, SNGP, NIB, TRG, LOTPTA, DGKC, PACE and ENGRO.

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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