Karachi Stock Exchange Weekly Analysis 9 Nov, 2013

The Karachi Stock Exchange (KSE) market was bullish, Market remains buoyant despite setback to peace talks. KSE – 100 index closed at 23,367.15 points by gaining 718.06 points or 3.17 percent. While KSE – 30 index closed at 17,845.10 points by gaining 606.84 or 3.52 percent. Average daily trading volumes at the local bourse also witnessed an uptick this week, rising by 9.5% WoW to 126mn shares.

Next week will be a shortened week due to Muharram holidays, and although expected IMF approval for the next tranche disbursement may provide a short-term fillip for the market, this would be a good time to reduce exposure to equities. Average daily turnover increased by 10 percent on week-on-week basis to 126 million shares against 115 million, whereas the value traded rose by 19 percent on week-on-week basis.

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

  • The EU Committee on International Trade approving the GSP Plus status for Pakistan, which is expected to be particularly beneficial for the country’s textile exporters. The European Union (EU) has granted duty free market access to Pakistani made‐ups under the Generalized System of Preference (GSP) Plus status with effect from January 1, 2014
  • Pakistan’s textile export would likely enhance by USD500mn to USD1bn annually and the domestic textile industry would become capable to use maximum capacity utilization. However, the main items of the textile sector like bedware, readymade garments and cotton fabric 
  • Ease in tensions between Pakistan and the US after the drone attack, as the cabinet did not take any decision on blockage of Nato supply
  • The week saw significant foreign portfolio investment inflows of $8.3 million against $18 million last week.
  • There are concerns on fx reserves with the World Bank delaying approval of a US$1bn loan to Pakistan sans implementation of energy/fiscal reforms under the IMF program
  • The market also ignored possible fallout on law & order conditions post the death of the TTP leader in a drone strike
  • Killing of the Pakistani Taliban chief in a US drone attack on Saturday, which heightened concerns on Pak-US relations, the future of NATO supply route and Coalition Support Fund (CSF) flows
  • Higher-than consensus CPI inflation number (at 9.08%), which sparked concerns on an impending interest rate hike in the upcoming November Monetary Policy Statement (MPS) 
  • There were talks of a potential early verification of Fertilizer sector Gas Supply Agreements (GSAs) which would bring an end to production uncertainty for the sector
  • Reports emerged that the government is considering increasing marketing margins on white oil products (potential earnings boost for OMCs)
  • APCMA released the latest cement sales figures this week where October 2013 Pak cement offtake was reported at 2.65mn tons, down 4% YoY and 10% MoM on account of fewer working days in the week (Eid holidays)
  • Economic Co‐ordination Committee (ECC) of the Cabinet, which is scheduled to meet on 5th Nov, will allow transfer of investment of Engro Corporation Limited in Engro Foods Netherlands B.V. to Engro Foods Limited (Pakistan)
  • ECC of the cabinet is likely to give the go‐ahead to a plan that will allocate 130mmcfd to fertilizer plants from OGDC’s Kunnar Pasakhi Deep field in an effort to enhance production of urea in the country 
  • The State Bank of Pakistan has granted due diligence permission to MCB Bank for proposed acquisition of a Kenyan bank. MCB Bank Limited has shown interest in acquiring a bank in Kenya to expand its overseas operations and has successfully got a No Objection Certificate (NOC) from the central bank to conduct due diligence of a small bank in Kenya 
  • Pakistan’s foreign exchange reserves increased by US$10mn to US$9.51bn during the week ended November 1 against US$9.49bn a week ago. However, the reserves held by the SBP witnessed a decline of US$75mn to US$4.22bn against US$4.30bn 
  • Thousands of illegal foreigners, mostly unskilled workers from Asia, are rushing to leave Saudi Arabia before an amnesty expires on Sunday as they risk being fined or even jailed

Top ten gainers of last week were: Jah.Sidd. Co., JS Bank Ltd, Engro Corp, Azgard Nine, Thal Limited, Allied Rental Mod, Nishat Mills Limited, IGI Insurance, Millat Tractorsa nd Hum Network Ltd

Top ten losers of last week were: Faysal Bank, Bata (Pak) Ltd., Shifa International Hospitals, Pak.Int.Con., Agritech, Muree Brewery Co Ltd, Kohat Cement, Pak Tobacco Co., Lotte Chemical Pakistan Ltd and Abbott Lab.

Top ten volume leaders were: JSCL, PTC, BOP, FCCL, BAFL, ENGRO, DGKC, BOP, NBP, MLCF, and FATIMA.

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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