Karachi Stock Exchange Weekly Analysis 29 Dec, 2013

The Karachi Stock Exchange (KSE) market has taken some correction amidst lackluster activity at year-end. KSE - 100 index closed at 25,258.05 points by losing -321.28 points or -1.26 percent, while average daily traded volumes increased by 27%WoW to 268mn shares. KSE - 30 index closed at 18,845.12 points by losing -259.43 or -1.36 percent.

Activity declined sharply from last week levels, with average daily turnover falling to 183mn shares, down 32% WoW, whereas US$ value traded decreased by 33% WoW. The week saw FIPI net inflow of a mere US$0.6mn. Trading activity within the KSE is expected to improve after the holiday season within international markets, as both local and foreign investors re-align portfolios. At the same time, market direction is likely to take cue from continued regulatory developments, particularly the upcoming CPI numbers as well as the announcement of gas prices expected on Jan 1’14. Limited foreign interest, rising political uncertainty, dismal earnings outlook in the telecom sector after new LDI licence and fall in the country’s foreign exchange reserves impacted the sentiment, despite hopes for surge in textile exports on GSP Plus status effective next year and release of the Coalition Support Fund. 

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

  • PTCL submitted a binding offer to Warid Telecom for acquisition of 100% shares
  • A visit by the Turkish PM this week, along with signing of MOU’s is expected to materialize in FDI improvement going forward
  • China National Nuclear Cooperation (CNNC) has reportedly committed US$6.5bn to finance the construction of two nuclear power plants in Karachi with a capacity of 1,100MW each
  • The foreign exchange reserves held b SBP has fallen to US$3.1bn on Thursday compared to US$3.4bn a week earlier. The decline in reserves was mainly due to U$185mn payments including US$162mn for debt servicing (US$58mn to IMF) and US$32mn for other official payments 
  • China Mobile Pakistan- Zong attained the LDI license after reaching an agreement with Pakistan Telecommunications Authority (PTA) and is allowed to provide cost effective and efficient international call and SMS services to its customers. which will take a bite out of Pak Telecom’s (PTC) LDI market share
  • The US Congress has reportedly passed a US$552bn Defense bill for 2014 which stresses to stop reimbursement to Pakistan if Nato supply routes are interrupted
  • Walt Disney Company is reportedly developing a strategy to eliminate Pakistan from the permitted sourcing country list
  • China Exim Bank will disburse funds of US$448mn to Pakistan for the 900MW Neelum-Jhelum Project in Jan’14
  • SBP releasing weak November 2013 Current Account numbers (US$589mn deficit for the month vs. US$96mn deficit last month)
  • The currency strengthened and December 2013 CPI inflation expectations continued to head down on the back of lower food prices, building hope for a benign January 2014 interest rate decision by SBP
  • Pakistan received the 2nd tranche (US$553mn) of the IMF’s EFF program
  • E&P’s too were newsworthy as the country’s oil and gas reserves as of June 30, 2013 were notified, where OGDC and PPL gained while anticipated reserve downgrade materialized for POL 
  • Banks were out of favor (risk of soft CPI + delay in rate hikes) while Cements had a strong run on price hike rumors
  • The calendar year result season is likely to kickoff shortly where numbers of corporate are likely to declare the financial results along with payouts
  • Lower inflation may boost investor confidence where investors may start expecting SBP to keep the discount rate at current levels
  • The prices of petroleum products are likely to be raised from January 01, 2014. Diesel price will likely be increased by PKR4/litre, petrol by PKR2.50/litre and kerosene oil by PKR4/litre. Added that OGRA would send the summary, seeking increase in POL prices to the MoP 
  • NBP has informed the SBP that it cannot invest PKR100bn in the PM Youth Business Loan Scheme as it involved great risk
  • The case of discount rate hike had weakened, as SPI inflation had continuously declined over the last three weeks, while the rupee had appreciated against the greenback
  • Strong December quarterly results expected from EFert, PSO, FFBL, and banks will also garner stock specific interest
  • Banking sector will continue to be on investors’ radar with better spreads in the offing and improved outlook for credit growth, especially in textiles after attaining the GSP Plus status
  • Investors are cautious because of fears for stoppage of US funding if NATO supply routes are interrupted and year-end factor. And also because of terrorist activities during last week
  • Engro Fertilizer’s IPO got over subscribed by 2.4 times and PIBTL got listed on the bourse



Top ten gainers of last week were: Pak Tobacco Co, Cherat Cement, GlaxoSmithKline Pak., ICI Pakistan, Fauji Cement Company, Hum Network Ltd, EFU Life Assur Ltd., J.D.W.Sugar, Allied Rental Mod and TPL Trakker Ltd.

Top ten losers of last week were: Shifa International Hospitals, Azgard Nine, MCB Bank Ltd, P.T.C.L.A, Stand.Chart.Bank, Askari Bank Ltd., JS Bank Ltd, Javedan Corporation, Nestle Pakistan and Packages Limited. 

Top ten volume leaders were: FCCL, PTC, BOP, MLCF, DGKC, NCPL, ANL, JSCL, LPCL and NCL.

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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