Karachi Stock Exchange Weekly Analysis 31 Aug, 2013

The Karachi Stock Exchange (KSE) market trend was bearish, KSE market witnessed technical correction, and profit taking. KSE – 100 index closed at 2 2,160.85 points by losing 554 points or -2.4 percent. While KSE-30 index reached on 17,250.47 by losing 366.74 points or -2.08 percent. Although average volumes traded did improve by 4%WoW to 204 million shares while US$ values traded declined by 16.1% WoW. On monthly basis the market lost nearly 5 percent of the market capitalization.

The week began on a positive note as State Bank of Pakistan’s (SBP) decision to postpone the Monetary policy statement (will now be announced September 13, 2013) boosted the market sentiment with KSE-100 rising by 0.9% on Monday.

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

  • Tension between India and Pakistan escalated with exchange of fire over the border
  • Investors are concerned on a possible interest rate hike in this month’s monetary policy Widespread floods in the country stifled the performance of the stock market this week
  • Recent escalation of Middle East tension given impending US missile attack on Syria
  • Investors were also concerned over rising dollar against the rupee and government’s targeted operation in the city
  • The Privatization Commission has formally prepared a list of 71 Public Sector Entities (PSEs) for divestment on fast‐track basis, subject to reaffirmation by the Council of Common Interests (CCI) of its approved privatization program. The list includes banks, insurance companies, energy sector companies, PIA, National Fertilizer Company (NFC) and Pakistan Steel Mills
  • There were rumors regarding the breaking of the cement price arrangement. Lucky Cement Limited’s (LUCK) decision to resign from the APCMA on policy issues further dented investor confidence
  • Pakistan State Oil’s lower than expected dividend announcement allowed bears to regain control at the local bourse
  • Key data release of the week included, Banking spreads which shrunk further in July 2013 and Pakistan’s budget deficit clocking in at 8.2% in FY13
  • There were macro concerns over oil price spike over potential NATO strikes on Syria
  • Foreign inflows clocking in at US$2.3mn, due to continued pressure from regional/local sell‐off, and currency deval fears from oil price spike
  • Indus Motor Company (IMC) has raised prices of Toyota Corolla and other high powered engine vehicles by Rs20,000 to Rs50,000 effective 1st September
  • Implicit return of power companies are likely to increase with PKR depreciation, hence stock price of HUBC, KAPCO and KOHE outdid the market momentum
  • News of Engro FERT offer for sale pushed the stock price of ENGRO upwards, while result of the company was fairly impressive
  • CCAC revised downward the cotton production to 12.65mn bales against the initial estimates of 13.22mn bales for the current season 13‐14
  • Pakistan’s foreign exchange reserves rose by US$73 million to US$10.399 billion during the week ended August 16 from US$10.326 billion 
  • Consumer Price Index (CPI) inflation for the month of July 2013 jumped to 8.26 percent where monthly inflation depicted an over 2.0 percent increase
  • Three major results during the week belonged to PSO, Kot Addu Power Company Limited (Kapco) and Lotte Chemical Limited. PSO announced five rupees dividend, Kapco announced Rs7.5, while Lotte Chemical did not give any payout. PSO dividend remained below than expectations, which resulted in a decline of company’s share price by more than three percent
  • Reversal of provisions boosted Bank of Punjab results as well as the stock prices

Top ten gainers of last week were: Kohinoor Energy, Allied Rental Mod, Stand.Chart.Bank, Kot Addu Power Co., United Bank, Nestle Pakistan, Shifa International Hospitals, Nishat Chunian Power, Engro Corporation and Hub Power Company.

Top ten losers of last week were: GlaxoSmithKline Pak., Pakistan Cables, Jah.Sidd. Co., Netsol Technologie, Mari Petroleum, Askari Bank, Dawood Hercules Corp, Azgard Nine, P.S.O. and Bankislami Pakistan.

Top ten volume leaders were: BOP, FCCL, JSCL, NBP, PTC, LOTCHEM, LPCL, ENGRO, NIB, and SSGC.

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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