Karachi Stock Exchange Weekly Analysis 15 June, 2013

The Karachi Stock Exchange (KSE) benchmark showed a mixed trend during the outgoing week but managed to close on green zone, on budgetary news flow. KSE-100 danced the tune of pro-business budget and gained 433 points or 1.9% in the very next session of FY14 budget. KSE – 100 index closed at 22,541.64 points by gaining 182.68 points or 0.82 percent. While KSE – 30 index has reached on 17,586.37 by gaining 164.5 points or 0.94 percent.

Average trading volumes; however, declined by 28 percent on week-on-week basis to 371 million shares against 517 million shares last week. This week foreign portfolio investment remained at $11.89 million. Events which will be important next week are news flows from meeting with IMF delegation visiting from Wednesday and monetary policy announcement which is scheduled for Friday.

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

  • Policy decisions like settling of circular debt in 60 days,  reduction of 1ppt in corporate tax rate to 34% (not including banks & E&P) and scaling up of PSDP by 32%YoY provided further impetus to performance of the local bourse
  • Investors were in a celebratory mood as none of the pre-budget fears (such as imposition of GST on milk and sugar, hike in cement FED and hike in tax rate on inter-corporate dividends) of the market were realized  
  • The luster of KSE‐100 seems to have faded as net foreign investors turned negligibly negative for the outgoing week
  • Germany is prepared to stand by Pakistan and announced an assistance of €93.5mn for FY14 to support Pakistan’s new democratic government
  • Announcement by MSCI to upgrade Qatar and UAE to MSCI EM Index from MSCI FM Index, which could result in a possible increase of Pakistan’s weight in MSCI FM Index
  • Overseas Pakistanis remitted US$12.762bn in 11MFY13 showing a growth of 5.74% compared to US$12.069bn received during the same period of last year
  • Announcement in the Annual Plan FY14 to complete the IP gas pipeline by Dec’14 and plans to pursue TAPI gas pipeline
  • Monetary Policy is scheduled to be announced on 21st of June, where there is growing consensus for a rate cut
  • Government has increased the GST by 1% to 17%
  • Applicable slab on income chargeable to tax have been increased from 5 to 12, underlining progressive tax regime
  • Turnover tax has been increased from 0.5% to 1%
  • 0.5% withholding tax on net movable assets
  • Income support levy will be imposed at 0.5% on net movable wealth exceeding PKR1.0mn
  • Auto sales in May 2013 surged by 11% MoM to 13,302 units, with PSMC volumes rising by 11% MoM while INDU sales dipping by 4% MoM
  • Cement manufactures immediately passed on the impact of higher GST by hiking cement prices by Rs30-35/bag to Rs485-490/bag. As a consequence the cement stocks rallied upwards with LUCK breaching the PKR200Lshare level along with DGKC reaching PKR88 plus level
  • Reduction in corporate tax rate by 1% to 34% and possible reduction in future to 30% provided the required energy to investors
  • Intention of current regime in resolving the circular debt via PKR503mn pushed the oil and energy stocks
  • Low‐cap stocks continued to generate hefty volumes with BOP, FCCL, TRG and LPCL were among the volume leaders
  • Oil & Gas sector stocks performed exceptionally well in the recent past with PSO, OGDC and MARI leading the market
  • Now the investors would be eyeing at the fiscal year corporate results along with calendar year half yearly announcement
  • Pakistan will likely go to IMF for a bailout package of around USD5bn to USD6bn in order to help and support falling economic condition of the country
  • $1.2 billion anticipated from 3G license auction
  • $800 million expected from Etisilat on account of PTCL privatization

Top ten gainers of last week were: Lafarge Pakistan, TPL Trakker Ltd, Hum Network, Pakistan Cables, International Steels, Fauji Cement Company, National Refinery, P.S.O., Nestle Pakistan and D. G. Khan Cement.

Top ten losers of last week were: Muree Brewery Co, Pak Services, Feroz 1888 Mills, Pak Suzuki Motor, Bank Of Khyber, Lotte Chemical Pakistan Ltd, Faysal Bank, Stand.Chart.Bank, Indus Motor and Dawood Hercules Corp.

Top ten volume leaders were: FCCL, LPCL, PTC, BOP, JSCL, TRG, BIPL, BAFL, DGKC, and SNGP.

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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