Karachi Stock Exchange Weekly Analysis 8 Sep, 2013

The Karachi Stock Exchange (KSE) market trend was bullish and came out of technical correction, Entry into IMF program supports market sentiment. KSE – 100 index closed at 22,766 points by gaining 605 points or 2.7 percent with average daily volumes of 194mn shares. While KSE-30 index reached on 17,485.53 by gaining 235.06 points. Key highlights remained CPI announcement, DGKC result, Supreme Court’s order to expedite 3G auction. Within cement sector, announcement of initiation of green field project at Hub by DGKC remained the highlight of the week. “Going forward, investors will eye monetary policy announcement next week,”.

According to analysts, In the present market dynamics, power stocks including HUBC and KAPCO along with LUCK can be considered as a safe bet. NCL, NML, PTC, KESC along with EFOODs are available at hefty discounts from where downside seems quite limited. Investing in cement stocks appear risky even at present discounted levels.

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

  • Approval of the new 3-year International Monetary Fund (IMF) Program equaling US$6.64bn under an Extended Fund Facility (EFF) provided much needed impetus to the market this week and the market reversed its corrective spell 
  • IMF board on Wednesday approved a USD6.7bn loan package for Pakistan to help revive its ailing economy. In a statement, the IMF said the three‐year programmed should help Pakistan rebuild its reserves and prevent a crisis in the balance of payments. IMF loans generally come with conditions for economic reform and should encourage other donors to step in with more funds
  • Few investors are anticipating that SBP may keep the discount rate unchanged in the upcoming monetary policy. On the other hand majority of the analyst community believe SBP can raise the discount rate by 50bps
  • Banks are reluctant to invest in the long‐term government securities mainly due to expected hike in the key policy rate
  • On the macro front, CPI inflation figures for the month of August 2013 were released which clocked in at 8.55% YoY, close to our 8.45% outlook and around the mid-point of consensus estimates (8.1-8.7%)
  • During the week, DG Khan Cement announced slightly below expected FY13 EPS of Rs12.56, up 34%YoY, with an in-line expected cash DPS of Rs3.0
  • Highlight of results though was DGKC’s plan to set up a 2.6mn ton cement plant in the South, announced at a time when the cement price/market share agreement is on shaky ground
  • Figures released by All Pakistan Cement Manufacturers Association (APCMA) for August show cement sales decline of 2%YoY
  • Supreme Court (SC) sets 60-day deadline for 3G license auction
  • OMV discovers oil, gas at Mehar gas field
  • The government collected about PKR595bn in different taxes on oil and gas in 2012‐13, accounting for almost 31% of total revenues collected by the FBR PKR1,936 billion
  • The market is likely to show mixed trend next week due to likely announcement of the monetary policy
  • Foreign portfolio investment saw a decline to $1.1 million from the last week’s inflows of $2.29 million
  • Forex reserves slip below $10 billion
  • Government has increased prices of petroleum products up to PRs4.50/ltr effective from September 1

Top ten gainers of last week were: Nishat Chunian, Pakistan Telecommunication, Nishat Mills, TRG Pakistan Ltd, Pakistan Cables, K.E.S.C., Dawood Hercules Corp, Rafhan Maize Prod, PICIC Growth and Fauji Fert Bin.

Top ten losers of last week were: Mari Petroleum, Siemens Pak Engg, Nestle Pakistan, Netsol Technologie, Clariant Pakistan, National Foods, J.D.W.Sugar, Kohinoor Energy, Allied Rental Mod and Attock Cement.

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

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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