Karachi Stock Exchange Weekly Analysis 8 Mar, 2014

The Karachi Stock Exchange (KSE) market activity was bearish. The bulls were triumphant on the bears at the exchange this week, with the index closing in the green all five days. KSE - 100 index closed at 26,892.23 points by gaining 1108.95 points or 4.30 percent. While KSE – 30 index closed at 19,546.91 by gaining 791.73 or 4.22%. Ceasefire from militants and low headline inflation figure rejuvenated the investors’ interest at the bourse, resulting in improved participation.

With market rebounding sharply, volumes also recovered and increased by 48% WoW and averaged at 178mn. Foreigners’ participation remained limited last week, with marginal net buying of USD0.33n, against USD5.5mn last week. Foreign flows will likely guide market direction next week while market participants would also be watchful of talks with militants.

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

  • The benchmark index posted gain of 4.3% during the week on account of improvement in macros and announcement of ceasefire by the militants over the last weekend and government has decided to resume talks with TTP
  • CPI inflation numbers for month of February’14 depicted a M/M deflation of 0.32% while Y/Y inflation was posted at 7.93%
  • The lower inflation and drastic appreciation in PKR against greenback may have surprised lot of investors which boosted the investor confidence
  • Investors are optimistic on the possible reduction in discount rate after viewing the inflation numbers 
  • From the onset of the current month GoP reduced the petroleum prices signaling analyst toward reduction in inflation numbers
  • Blue chip stocks primarily drove index performance with PPL, UBL, OGDC, HUBC and MCB cumulatively contributing 474pts (43%)
  • Makori gas plant becomes operational
  • Local cement sales go up. Impressive growth in local cement sales during February. Owing to the latter, 3 out of top 5 volume leading companies belonged to the cement sector, which further highlights active investor participation
  • LUCK recently announced its 1HFY14 results posting EPS of PKR15.96, up 20% YoY
  • TGL announced its 2QFY14 results last week posting EPS of PKR0.33, down 42% YoY
  • THALL posted EPS of PKR7.38 for 1HFY14, up slightly 3% YoY
  • Pakgen Power Limited (PKGP) posted CY13 EPS of PKR2.98, down 45% YoY. Earnings for the quarter clocked in at PKR0.01, down 99% YoY
  • PSO’s financial result did provide the required thrust or the required energy to market participants
  • Major results included NBP, MEBL and PSMC where NBP result was significantly lower than expected, and the stock thus lost 8% during the week
  • NBP financial results were well below the investor’s anticipation, hence it did impact the scrip performance for a while
  • EFOODS did make a greater come back and hit the PKR106/share level (up 10% W/W)
  • Few bank including HBL, AKBL and UBL were amongst the major gainer
  • Hascol Petroleum Ltd (HPL) is scheduled to be listed on the country’s stock exchanges through an initial public offering (IPO)
  • Pakistan forwarded bills worth US$1.6bn to the US on account of Coalition Support Fund (CSF),
  • Obama seeks US$1 billion for Pakistan in 2015 budget
  • ADB has decided to allocate USD3.25bn under a new lending programmed for next FY13‐16, focusing on reforms in the energy sector and the challenges faced by the state‐owned enterprises
  • GoP formally awarded 8 more MPCAs and MPCLs to foreign and local exploration and production companies
  • China Gezhouba Group Corp/CEEG showed interest in investing USD10bn in energy and infrastructure projects in Pakistan and a meeting was held in. Company will participate in the bidding of Gaddani Coal Project and is also interested in Jamshoro Power Project 
  • Warid official indicate that the ongoing due diligence between Abu Dhabi group and Etisalat for the merger and acquisition of Warid Telecom Pakistan by PTCL have been called off since an agreement could not be reached on the desired valuation for the company

Top ten gainers of last week were: Shell Pakistan, Muree Brewery Co Ltd, Habib Bank Ltd, Stand.Chart.Bank, Siemens Pak Engg., Askari Bank Ltd., TRG Pakistan Ltd, IGI Insurance, Engro Foods Ltd and EFU Life Assur Ltd.

Top ten losers of last week were: National Bank of Pak, Nestle Pakistan, Millat Tractors, Ghani Glass, TPL Trakker Ltd, Engro Corp, Shifa International Hospitals, Nishat Power Ltd, Pak Tobacco Co and Agritech.

Top ten volume leaders were: MLCF, LPCL, BOP, TRG, FCCL, BAFL, NBP, DGKC, JSCL and AICL.

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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