Karachi Stock Exchange Weekly Analysis 6 April, 2013

The Karachi Stock Exchange (KSE) benchmark movement was bullish. A flurry of news & election visibility lead the KSE-100 up 3.3% WoW. KSE – 100 index closed at 18,636.03 points by gaining 592.72 points or 3.28 percent, while KSE – 30 index closed at 14,546.19 points by gaining 387.81 points or 2.38 percent. With the result season fast approaching, trading volumes picked up with average daily traded volume increasing by 39%WoW to 210.45mn shares. Interestingly, investor participation has improved by around 39% to 210mn shares on average daily volume basis in the outgoing week.

Positive macroeconomic data along with a flurry of sector-specific news acted as a catalyst for the gains. Average daily volumes jumped 39% to 210 million shares traded per day. Average daily values skyrocketed 83% to Rs7.78 billion per day as a lot of activity centred upon blue-chips. Market capitalisation rose 3.2% to Rs4.58 trillion by the end of the week.

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

  • Strong data on urea, DAP and cement sales for March 2013, speculations ahead of upcoming State Bank of Pakistan’s policy announcement and expectations of higher LDI revenues for telecom sector played a catalyst role in prevalence of bullish sentiment at the market
  • The country will receive an inflow of USD500mn during next few months, as Unilever Overseas Holding Limited has agreed to buy‐back Unilever Pakistan's shares at a price of PKR15,000/ share recommended by the special committee of KSE
  • Analysts said Unilever buyback brought interest in other food producers like Engro Foods, National Foods and Nestle Pakistan 
  • CPI for Mar’13 clocked in at 6.57%YoY/0.41%MoM, the lowest YoY reading since Jul’09
  • Imposition of fine by CCP on ENGRO and FFC for abuse of market position and an unjustified increase in the prices of urea during Dec’10 to Dec’11 period and the subsequent decision of the two companies to appeal against the decision in court
  • Statement by Standard and Poor’s (S&P), stating that since Pakistan’s trade and capital flows are not expected to improve in the near-term, and considering the lack of alternative sources of bilateral or multilateral funding, it is imperative that Pakistan approach IMF for shoring up reserves
  • ENGRO and FFC were under the firing range after CCP imposed hefty penalty on both the companies. CCP has imposed the highest‐ever penalty of PKR8.64bn on ENGRO and the FFC for increasing urea prices to unreasonable level‐ one of the main reasons behind high food inflation in the country
  • The fiscal deficit for FY13 is expected to be in excess of 8% of GDP due to massive rise in power sector subsidies
  • SBP has been decided that rate of refinance under the EFS effective from April 1, 2013 and onward till further instructions will be 8.40%/ annum
  • Pakistan will have to repay around USD1bn of outstanding loans to the IMF in the next 3‐months and the country is likely to face balance of payments crisis during the tenure of the caretaker setup
  • Warid Telecom International of the UAE has offered to buy back all shares of Wateen Telecom at PKR4.5/share and get the latter delisted from stock exchanges
  • Government of Pakistan is likely to increase power tariff by over PKR4/unit across‐the‐board after NEPRA allowed hike in tariff to LESCO
  • FBR has extended amnesty scheme up to April 6 this year for legalizing non‐duty paid smuggled vehicles in view of the 'healthy response' at the national level
  • With the revision in domestic oil prices, the government has raised margins for OMCs on motor gasoline by 25 paisas/ litre, ie, 13% and on high‐speed diesel by 10 paisas/ litre, ie, 6%.
  • PSO has been assured PKR105bn by the MoF and MoWP to ensure 16,000 tons of FO per day instead of the 12,000 tons currently being supplied. PSO reported to the Prime Minister that it had defaulted on domestic and international payments and warned of a complete dry‐out in or around second week of May on current supply pattern of 16,000 tons per day of both HSFO and LSFO
  • SNGPL has filed a petition with the OGRA for increase in gas tariff by PKR 53.83/mmbtu in each category of consumers from July 1, 2013
  • Investors were provided a pleasant surprise early in the week as inflation numbers for the month of March were reported at 6.57%, down considerably from the nine-month average of 7.98% for the fiscal year 2012-13
  • The State bank of Pakistan is due to announce its next monetary policy on April 12 and it is widely expected that the status-quo will be maintained by the bank
  • Foreigners continued to purchase equity at the bourse and were again net buyers of $5.7 million worth of equity during the week, up from $2.2 million in the previous week
  • Cement sector sales also clocked in 3% higher on a year-on-year basis and hit a record monthly high of 3.33 million tons sold
  • March results are expected to arrive from the next week, which will have a positive impact on the market. Fauji Fertilizer Bin Qasim Limited would be the first company to announce its March-end result on April 12

Top Gainers last week were: UniLever Pakistan, National Foods, Bata (Pak) Ltd., IGI Insurance, Muree Brewery Co, Clariant Pakistan, Engro Foods Ltd, Cherat Cement, Thal Ltd and  Pak Suzuki Motor.

Top Loers last week were: Jubilee General Insurance, Hum Network, TPL Trakker Ltd, Pak Reinsurance, Pace (Pak), Nishat Chunian Power, Faysal Bank, NIB Bank, Sui North Gas Pipe and Allied Bank.

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

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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