Karachi Stock Exchange Weekly Analysis 7 July, 2013

The Karachi Stock Exchange (KSE) benchmark was bullish. Bulls remained dominant at the local bourse throughout the week after two weeks of bearish spell. KSE – 100 index closed at 2 2,178.34 points by gaining 1,172 points or 5.58 percent. While KSE – 30 index has reached on 17,144.06 by gaining 936 points or 5.78 percent.

Average daily volumes during the week also increased by a robust 26.7%WoW to 262.6mn shares. With the start of Ramazan next week volumes might decline as the market business timing would be shortened. Foreign inflow was recorded at USD7.84mn also contributed towards the bullish rally.

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

  • The key event this week was the staff-level agreement between IMF and Pakistan regarding a new program worth US$5.3bn which carries positives for medium-term macroeconomic stability
  • Release of PkR161.2bn to IPPs to partly settle circular debt alongside a planned bond issue worth PkR127bn to OGDC, PPL and PSO
  • PM Nawaz Sharif was expected to request China’s assistance for a number of projects particularly pertaining to the energy sector. Specifically the PM sought support for construction of 1,100MW nuclear power plant, release of US$448mn loan for the 969MW Neelum‐Jhelum hydropower project and setting up of an oil refinery at Gwadar port
  • CPI inflation figures were also released during the week for the month of June 2013 that clocked in at 5.9% YoY
  • Proposed diversion of 60mmcfd gas reserved for Guddu Power Plant to the fertilizer sector
  • Bullish sentiment was also perpetuated by visiting UK PM David Cameron’s promise to increase bilateral ties with Pakistan
  • News related to 60mmcfd gas diversion from Guddu power plant to fertilizer plants pushed ENGRO upwards, while rest of the sector stocks followed the news
  • A ship carrying 53,000 tons of urea, imported TCP from international market, reaching Pakistan in the third week of this month
  • ECC of the Cabinet in its meeting approved to import a total of 300,000 tonnes of urea for Kharif 2013
  • Irrespective of discount rate cut, banking stocks were in rock & roll mood as UBL, HBL and MEBL moved swiftly towards higher levels. Most probably rumors of reduction in minimum deposit rate may have instigated the bullish momentum in banking stocks
  • The banking sector's cash recovery against NPLs posted a notable decline of 38% during the 1QCY13 as compared to previous quarter
  • Etisalat gave green signal to release the outstanding amount of USD800mn soon. Amount was withheld after the privatization of PTCL, it is learnt. A joint task force comprising members from Privatization, IT and Finance ministries and Etisalat would be constituted to resolve all the contentious issues and move forward
  • Increase in 5% withholding tax on telecom sector has started to pare its revenue since during the first four days of the imposition of levy the recharge by prepaid card users registered a decline of an average 4% per day. The government has long planned to auction licenses of 3G/4G and raise USD1bn dollar 
  • In order to improve the present situation at operational level of Pakistan Railways, the revenue position will have to be made better for which a New Carriage Freight Plan is inevitable, FM for PR 
  • During FY13, FBR revenue collection came in at PRs1.92tn, a shortfall of PRs125bn from revised target of PRs2.05tn

Top ten gainers of last week were: K.E.S.C., Sui North Gas Pipe, Pak Tobacco Co, Meezan Bank, United Bank, Dawood Hercules Corp, Engro Corporation, Sui South Gas, NIB Bank and Netsol Technologie.

Top ten losers of last week were: Shifa International Hospitals, EFU General Insurance, Stand.Chart.Bank, Nestle Pakistan, Indus Motor, Pak.Int.Con, Pak Suzuki Motor, Rafhan Maize Prod, Clariant Pakistan and IGI Insurance.

Top ten volume leaders were: PTC, KESC, FCCL, BOP, NBP, JSCL, LPCL, ENGRO, SNGP and BAFL.

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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