Karachi Stock Exchange Weekly Analysis 10 March, 2013

The Karachi Stock Exchange (KSE) benchmark movement was bearish (After seven weeks of bull-run) because of lack of triggers. KSE – 100 index closed at 17,964.18 points by losing 221.01 points or -1.22 percent, while KSE – 30 index closed at 14,590.74 points by losing -275.11 points or -1.85 percent. The weekly turnover went up by 40.91 percent and traded 235.84 million shares as against previous week’s 399.15 million shares. Investors were kept on their toes throughout the week as an uncertain law and order situation coupled with sector specific regularity issues dictated sentiment at the KSE.

According to experts, as the result season almost over, trading activity might slowdown in the near term. However, developments in Telecom (CCP ICH hearing) and Fertilizers (imposition of GIDC and approval of concessionary gas rates for ENGRO) should drive sector specific Interest. Until and unless the core political parties will announce the interim government and election date, market behaviour is likely to remain lackluster. Analysts said some activity was also witnessed in cement companies in anticipation of cement price increase.

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

  • Fall in heavyweights OGDC and MCB share prices pushed the index below 18,000 points mark
  • Reduced termination call rate from US forced investors to trim their positions in the telecom sector
  • The unrest in Karachi has kept investors in a dubious mood after attack in Abbas town which killed over 50 persons and destroyed residential properties
  • Expected increase in PTA import duty, driving sentiment and activity in the Chemicals sector, particularly LOTPTA
  • Positive news for refineries is the expectation of an increase in deemed duty on High Speed Diesel (HSD) from 7.5% to 9% 
  • Federal Communications Commission of USA ordering US Telcos to suspend payments to Pakistani LDI operators in excess of US$0.02/min
  • The government approved the Tax Laws Amendment Bill 2012 to launch the amnesty scheme to non-tax payers
  • Asian Development Bank (ADB) stated that Pakistan would need a US$6bn-US$9bn IMF bailout package before the end of the year in the face of an impending BoP crisis
  • Completion of calendar year result season along with quarterly season has already crossed the finish line
  • Investors seem perplexed whether elections would take place or not despite surety provided by Army chief and top tier politicians. Investors are also anxiously waiting for the names of interim Prime Minister which may provide a long lasting clarity
  • Stock specific news has kept fertilizer stocks including DAWH and ENGRO in the limelight
  • PTC lost considerably value after international operators challenged the new hike in tariff to USD0.08 cents
  • Government of Pakistan is learnt to have directed Nespak to begin the construction of the Iran‐Pakistan gas pipeline from Mar’11 this year
  • In order to recover tax money, the FBR has approached banks to directly deduct income tax from the account of taxpayers/defaulters
  • Pakistan’s inflation numbers gauged by CPI stood at 7.38% as against 8.03% in January. On monthly basis, the inflation declined by 0.3% as against increase of 1.7% last month, while the average inflation in the eight months of 2012‐13 stood at 8.16% versus 10.80% in the same period last year 
  • Rice exports hit US$ 1 billion mark in 7MFY13
  • With huge gas losses and increasing gas shortages, the government is embarking on a major reform programmed envisaging unbundling of the two gas utilities SNGPL and SSGC into one countrywide transmission company and a number of regional distribution companies and introduces a new tariff regime for gas consumers 
  • 3‐Companies in the fold of the Fauji Group —FF; FFC and FFBL announced that they would purchase 21.3% shares in AKBL from the public at an offer price of PKR24.32/ share. The public shareholding acquisition would be for 173.5mn shares which would amount to 21.3% of the total issued share capital of AKBL 
  • Forex reserves dipping by US$ 380 million to US$ 12.81 billion
  • T-bill cut-off yields inching up by 2-9bp
  • Cement sales surged by 5%YoY in Feb-2013, while ATRL and LOTPTA outperformed the market by 14.2% and 4.9% respectively in anticipation of positive regulatory changes
  • PTC underperformed the market by 9.8%WoW on news of US based Federal Communication Commission’s order prohibiting U.S telecom companies from paying above the Pre ICH rate (US$0.02/min) for calls to Pakistan 
  • Engro was a star performer at the close of the week as rumors abounded that the company could be getting LT gas at a much lower rate (US$1.05- 1.70/mmbtu) than earlier expected rate of US$5/mmbtu 
  • Fatima group (Fatima Fertilizer & Pak Arab Fertilizer) has successfully formulated non‐explosive fertilizers which will be tested in Jun‐Jul 2013 and marketed in the next Rabi season ie starting Oct‐2013. US military officials are now expected to test this fertilizer in their next meeting in Pakistan 

Dawood Hercules, Attock Refinery, Nishat Chun Power, Kohinoor Energy, Colgate Palmolive, Soneri Bank, Hum Network, Standard Chartered Bank, Nishat Power, Lafarge Pakistan, and Indus Motors were the major gainers while Jahangir Siddiqui & Co, JS Bank Limited, Azgard Nine, SNGP,  P.T.C.L., Bankislami Pakistan, Shell Pakistan, Bata (Pak) Ltd., Faysal Bank, and Bank of Punjab were major losers in the benchmark KSE-100 this week.

Top ten volume leaders were: LOTPTA, PTC, FCCL, LPCL, ENGRO, JSCL, NCPL, DGKC, ANL, and PACE.

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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