Karachi Stock Exchange Weekly Analysis 3 March, 2013

The Karachi Stock Exchange (KSE) benchmark movement was bullish and reached to new historical levels, on the back of continued robust corporate results for the quarter ended December 2012 and steady foreign portfolio investment inflow. KSE – 100 index closed at 18,185.19 points by gaining 110.92 points or 0.61 percent, while KSE – 30 index closed at 14,865.85 points by gaining 51.78 points or 0.35 percent, amidst higher average daily volumes, which recorded an increase of 5.08%WoW to stand at 324.43mn shares. The weekly turnover went up by 8.15 percent and traded 399.15 million shares compared to previous weeks 369.04 million shares.

Major activity was witnessed in Engro as it gained 8 percent during the week amid positive development on gas supply. National bank and Hub Power Company followed suit after announcing handsome payouts for their December results. While telecom sector witnessed heavy volumes amid uncertainty regarding future of higher LDI business. Further lower than expected CPI announcement also helped index. Going forward, announcement on caretaker setup will lead the sentiments. Caretaker setup will have an impact on the market and it is likely that the market will not sustain the current trend because it is under pressure. If elections are delayed, the market will go down, therefore, the next 15 days are crucial for the market.

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

  • CPI for February 2013, which clocked in at 7.4%YoY (lower than expected), which has also helped the index gain
  • Telecommunication sector remained the highlight of the week as the court issued decision in the international call rate case 
  • ECC’s decision regarding allocation of gas to SNGP-based fertilizer manufacturers and approval of increase in OMC margins, have created a positive impact
  • The news of gas supply to ENGRO and DAWH continued to fuel the stock as both the stocks presented over 13% return to the investors
  • SBP made a sizable payment of US$391.8mn to the IMF and the GoP awarded the contract for Pakistan’s portion of the Iran-Pakistan pipeline
  • This week witnessed result-based activity in the market (average market volumes up by 5.08%WoW amid financial results of NBP, HUBC, TELE and ANL, among others), we note that most corporate results have already been announced
  • Investor attention is likely to turn to upcoming general elections (5yr tenure of the GoP comes to an end in mid-Mar’13) within the backdrop of external account concerns and a potential reentry in a fresh IMF program 
  • During the week exceptional flow was witnessed at the benchmark where USD10.46mn inflow was register. The foreign buying euphoria encourages investors to remain bullish in the market
  • Feb 2013 was Yet another amazing month for investors with 5.4% return recorded in this month with average daily volume of 286mn shares
  • FBR Chairman stated that the FBR will shortly issue a SRO to impose  % sales tax at each stage of the textile sector bringing this powerful sector into taxation regime
  • Ghee, cooking oil prices up, Pakistan’s food import bill plunged by 14.4% in 7MF13 to USD2.6bn from USD3.045bn in the same period last fiscal year
  • GoP has decided to increase the OMCs margin by 10 paisa (5.7%)/liter on High Speed Diesel against the demand of PKR1.22/liter as interim relief
  • Car production increased by 62% in Jan’13 to 11,409 units as compared to 6,702 units a month in Dec’12, the data of the PAMA revealed
  • Local petroleum product prices were hiked by 3-4%
  • Fertilizer offtake figures for January showed a decline of 8%YoY
  • Hub Power announced plans to hive off its Narowal plant
  • ECC of the Cabinet approved an interim 'business plan' for PIA and directed to issue fresh continuing guarantees to the tune of PKR49bn during the ongoing year to meet the critical liquidity condition of the corporation 
  • MoF has released PKR15bn to PSO, enabling it to continue importing FO by clearing L/Cs payments to international fuel suppliers
  • India is likely to cancel Pakistani cotton import orders after the commodity’s price surged significantly from the rate at which the two countries have agreed upon
  • State Bank of Pakistan released data on banking spreads (difference between weighted average lending and deposit rates) for January 2013 where spreads depicted their largest MoM drop since June‐08 (down 33bp to 6.21%)
  • Buying interest seen in Hub Power on better corporate results and cash dividend announcement while expectations of additional gas supply from March grabbed investor interest in Engro 

Dawood Hercules, Engro Corporation, National Refinery, Lafarge Pakistan Cement Ltd, Azgard Nine, Pakistan Cables, Fauji Cement Company, Engro Foods, Rafhan Maize Prod., Netsol Technologies were the major gainers while TRG Pakistan, NIB Bank, Soneri Bank, Grays Of Cambridge, Kohinoor Energy, Clariant Pak, Pace (Pak) Ltd., Nishat Chnian Power, IGI Insurance, and Jahangir Siddiqui Co. were major losers in the benchmark KSE-100 this week.

Top ten volume leaders were: FCCL, PTC, ANL, JSCL, ENGRO, NBP, LPCL, TRG, DGKC, and EFOODS.

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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