Karachi Stock Exchange Weekly Analysis 22 Feb, 2014

The Karachi Stock Exchange (KSE) market was bearish because of security risk and disappointing results. This was a 4th negative week in a row at the KSE. This is only the third time in five years that the market has declined for four consecutive weeks (last seen in July 2010 and September 2013). KSE - 100 index closed at 25,603.35 points by losing -790.78 points or -3.0 percent. While KSE – 30 index closed at 18,627.59 by losing -477.22 or -2.50%. Weak market sentiment also reflected in average traded volumes which plunged by 20%WoW to 203 million shares.

Warren Buffett’s one of the most famous quotes “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” clearly differentiates the two classes of investors. The sensible investors may have started selling gradually in the light of fearful benchmark and stock levels.

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

  • Government team refuses to attend meeting with TTP spokespersons. Government pulling the plug on peace talks with the Taliban and retaliating against attacks on security forces via military strikes
  • SBP’s foreign reserves rise to US$ 3.1 billion
  • The delay in announcement of decision on OMC margins by the ECC and below expected result announcements by HUBC and KAPCO on the back of higher repair and maintenance costs depressed market sentiment
  • Disappointing results posted by HUBC (-13%) and KAPCO (-10%) on the back of major overhauls and maintenance charges spoiled the mood with both stocks cumulatively dragging the index down by 188pts. Consumers continued their downward trajectory with NESTLE (-12%) also contributing to the decline. Index heavyweights OGDC (-2%) and MCB (-3%) dragged the market further
  • Foreigners remained net buyers during the week, buying shares worth USD2.7mn on a net basis against net sell of USD5.6mn last week
  • Foreign flows and news flow over peace talks with the Taliban are expected to guide the momentum of the market next week. Earning announcements may also set the tone with results for OGDC, HBL, LUCK and NBP due next week
  • Pakistan paying US$147mn to IMF on account of 28th Stand By Arrangement installment
  • Current account (C/A) posting a deficit of US$464mn in January 2014 vs. a deficit of US$283mn recorded in December 2013
  • Large scale manufacturing (LSM) growing by 6.8% in 1HFY14
  • Cotton arrivals reaching 13.24mn till February 15, 2014, up 5%YoY
  • Finance Minister Ishaq Dar hinted on 15th Feb that revenue collection may witness a shortfall in the range of PRs 150 billion to PRs 175 billion for the current fiscal year
  • Pakistan will face 0.5mn tons urea fertiliser shortfall during kharif season CY14 due to the curtailment of natural gas supplies to the fertilizer plants
  • Pak‐China Investment Company will invest in renewable energy and infrastructure development projects in Pakistan. Decision to this effect was made during a meeting of PCICL under FM. Cao Wenjian, MD PCICL, on the occasion briefed the FM that his company has the total assets worth PKR16bn in Pakistan and has been investing in sectors like fuel and energy, ports and shipping

Top ten gainers of last week were: TRG Pakistan Ltd, Lafarge Pakistan, J.D.W.Sugar, Colgate Palmolive, Bata (Pak) Ltd., PICIC Growth, Fauji Fert Bin, Kohinoor Textile, Maple Leaf Cem. and International Steels Ltd.

Top ten losers of last week were: Muree Brewery Co Ltd, Grays Of Combridge, National Foods, IGI Insurance, Nishat Chunian, Century Paper, Mari Petroleum, Soneri Bank, Hub Power and EFU Life Assur Ltd.

Top ten volume leaders were: TRG, LPCL, JSCL, FCCL, ACL, HUBC, ENGRO, BOP, DGKC and ANL.

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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