Karachi Stock Exchange Weekly Analysis 29 June, 2013

The Karachi Stock Exchange (KSE) benchmark had experienced an extremely bearish sentiment with profit-taking witnessed for a second consecutive week. KSE – 100 index closed at 21,005.69 points by losing 692.66 points or -3.2 percent.

Average trading volumes, however, declined by 36 percent on week-on-week basis to 207 million shares against 322 million shares last week. Foreign portfolio investment remained at $3.69 million.

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

  • Prime Minister Statement in National Assembly regarding Pervez Musharraf trial under Article‐6 and talk of the re-opening of Swiss cases against President Zardari dampened the market sentiment
  • Investors have serious concerns on foreign selling, post the rout in international markets
  • Investors have also some serious concerns on wealth tax and declining international markets, while according to experts new investment is expected from July 1
  • The results will also start coming from July, which will result positively in the market
  • The energy chain remained in the limelight on the back of Pakistan Petroleum Limited’s announcement of another discovery and approval of a plan to settle Rs503 billion circular debt in two phases by August 10
  • Selloff in the index heavyweight MCB Bank and the Oil and Gas Development Company Limited also forced the index to fall
  • Dismal cement sales data for June 2013 and uncertainty over the release of International Monetary Fund’s (IMF) $5.0 billion bailout package also contributed to the decline
  • Details on circular debt resolution with a total plan of PRs 320bn plan, of which PRs 165bn would be a direct cash injection
  • PPL’s discovery at Hala Block yielding 14.3mmcfd of gas and 125bbl/day of oil
  • Finance Minister in response to queries from the opposition regarding plans to erase PRs503bn in circular debt over 60 days categorically rejected the notion of printing currency notes to clear the liability 
  • The National Assembly approved Finance Bill 2013 through a majority vote. The bill was designed to give effect to the Sales Tax, Federal Excise Duty (FED) and Customs Duties measures from June 13, 2013 with an increase in GST from 16 to 17%, imposition of 17% FED on financial services and 1% 'further tax' on supplies to unregistered persons to mobilize an additional PRs207bn taxes 
  • Reduction in discount rate by 50bps was unable to fuel the market sentiment either, which was anticipated by investors
  • Pakistan could attract investment up to USD10bn for setting up a modernized nationwide network and license fees over the next five to eight years
  • To meet the revenue target of PKR2.475tn for FY13 tax relief announced in the budget windup speech has been adjusted through increase in WHT rate on mobile phone users from 10% to 15%. Mentioned that in consultation with stakeholders it has been decided that the present rate of WHT on cellular users be increased from 10% to 15%, which is adjustable at the time of final assessment 
  • Fatima Group has made all the arrangements to set up one 118.8MW co‐generation power plant in Muzaffargarh at an estimated cost of USD234.72mn
  • Cement also stayed in the green zone, buoyed by post budget cement price hike (Rs30-35/bag) and reeling international energy prices
  • Fertilizer was an underperformer, as latest reports suggest a >60% surge in feedstock gas prices could be on the cards for the sector when the government unveils its latest gas pricing mechanism

Top ten gainers of last week were: IGI Insurance, Pak.Int.Con, Pak Suzuki Motor, Pakistan Telecommunication, Lucky Cement, GlaxoSmithKline, Pak Reinsurance, Nishat Chunian Power, National Refinery and Stand.Chart.Bank.

Top ten losers of last week were: MCB Bank, Pakistan Cables, Jah.Sidd. Co., Allied Rental Mod, B.O.Punjab, Netsol Technologie, Bank AL‐Habib, Engro Corporation, Grays Of Combridge and Attock Refinery.

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

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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