Karachi Stock Exchange Weekly Analysis 23 February, 2013

The Karachi Stock Exchange (KSE) benchmark movement was bullish and crossed the psychological  level of 18,000 points with average daily volume of 309mn shares. Volumes are largely tilted towards low cap high net worth stocks. Stock specific news from time to time hit the market, which continues to boost investor confidence and sentiment. KSE – 100 index closed at 18,074.27 points by gaining 277.05 points or 1.66 percent, while KSE – 30 index closed at 14,814.07 points by gaining 251.28 points or 1.73 percent, despite the prevailing political and law & order situation in the country.

Strong textile sector exports data, record earnings announcements, current account surplus for July to January 2013, expected hike in Karachi Electric Supply Company power tariff easing circular debt concerns in energy sector and hopes for OGDC gas sales agreement with fertilizer companies affected the sentiments of the investors during the outgoing week.

According to analysts, the current Bull Run is based on pre result season or in anticipation of general elections, and it will continue in next week also. If election schedule is announced next week, it will further boost the market. Majority of the investors are foreseeing better time ahead of elections which justify the current buying euphoria. They believe bull is likely to remain active in the upcoming days but prudency suggests investors need to remain cautious and keep valuable stocks in their baskets. Modalities are likely to be settled soon as investors in anticipation of greater production and sales volume pushed the stock upwards.

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

  • The market was concerned about the split of Pakistan Peoples Party and Muttahida Quami Movement, and the resignation of Dr. Hafeez Sheikh from the post of Finance Minister
  • Cement sector continued to remain in the limelight as investors brought shares on hopes of strong corporate results for the quarter ending in December
  • Results announcement from National Bank of Pakistan and United Bank Limited will also play a pivotal role in market movement
  • Corporate announcements of various stocks hit the stock market with PSO leading with exceptional payout, FCCL results were in line with market estimates and OGDC was unable to beat analyst expectations. NML can be considered as a surprise package where investors continue to accumulate stock at current level. With the onset of the upcoming week, banking stocks including NBP and UBL is expected to announce its results which are likely to keep investors interested. We are expecting better earnings from UBL while lower earnings & greater payout from NBP.
  • The KSE witnessed a decent week as trading volumes also improved by 14.2% to 309 million shares and foreigners remained net buyers of US$11.6mn this week
  • Gas Sale Agreement (GSA) on the Kunnar Pasaki Deep (KPD) field between fertilizer companies and Oil and Gas Development Company (OGDC)
  • Ministry recommending a hike in Oil Marketing Companies’ (OMCs) margins
  • The news related to international clearing house for LDI where SC decided the case in favor of telecom companies. As a consequence PTC followed by rest of the telecom players remained in limelight
  • Engro continues to grow backed by agreement with OGDC for supply of 79mmcfd gas to Engro
  • All the political parties are looking ahead towards the general elections which are likely to be announced shortly
  • Chief of Abu Dhabi Group of the UAE and Pakistan’s Malik Riaz has joined hands in a bid to construct the world’s tallest building in Karachi. The parties signed a deal in Abu Dhabi, which envisages a staggering investment of usd45bn in Pakistan’s real estate 
  • OGDCL starts production from Sinjhoro. OGDCL has also started first ever negotiations with the fertilizer sector in order to reach an agreement for direct gas sales to them. Earlier the gas sale agreement of fertilizer companies were with the distribution companies i.e SSGCL) and SNGPL 
  • SSGC to get 100mmcfd additional supply of gas. Through new gas fields, supply of 50 to 60mmcfd is expected by early next year. While another 50mmcfd LPG‐air mix gas through LPG plant under completion at port Qasim will further beef up the supplies
  • PIA to induct 5 aircraft in March‐April
  • SBP has granted approval to HBL for the acquisition of Citibank's (Pakistan operations) consumer business portfolio
  • Pakistan’s exports of textile and clothing witnessed more than 8% growth during 7MFY13 over the same months last year
  • KESC to invest US$ 500 million in power sector in Karachi
  • Asian Development Bank (ADB) planned a firm lending program totaling US$2.47bn focusing on energy sector, rehabilitation of aging irrigation infrastructure, poor water management and urban services. This lending would be part of the country partnership strategy, spread over a period of two years 
  • In latest T‐bill auction, cut‐off yields climbed up 18/20/14bp to 9.27%/9.36%/9.39% for 3M/6M/12M, in line with the increase in secondary market yields. Majority (91%) of the participation was skewed towards 3‐month T‐bill, which suggested market expectations of near‐term interest rate hike 
  • Foreign exchange reserves fell by US$337mn to US$13.058bn during the week ended Feb 15th partly due to the re‐payment of US$145.5mn to the IMF which was due on Feb 11th 

Murree Brewery, Engro Corporation, Packages Limited, Dawood Hercules, Nishat Chun Power, P.T.C.L.A, DGK Cement, MCB, Nishat Mills Ltd., and Nishat Chunian were the major gainers while Millat Tractors, Sui Southern Gas, National Foods, Pakistan Tobacco Company, Agriauto Ind Sui Northern Gas Ltd, NIB Bank, Standard Chartered Bank, Pak.Int.Con and TPL Tracker were major losers in the benchmark KSE-100 this week.

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