Karachi Stock Exchange Weekly Analysis 3 May, 2014

The Karachi Stock Exchange (KSE) market was fairly volatile where a number of companies announced their financial results. KSE - 100 index closed at 28,921 by gaining 71 points or +0.2 percent.

Trading activity remained subdued during the week as well, with average daily volume of 144mn, flat WoW. Foreign flows continued to remain positive during the week with net foreign inflow of USD15.4mn down 17% WoW. With no immediate triggers on the horizon, we expect market to remain range bound with foreign flows likely to guide market direction. Going forward, after the conclusion of March quarter results, the monetary policy will be the most eyed event of the month, though date has yet to be announced.
Following news have played vital role in Karachi Stock Market index movement:
  • KSE-100 index remained flat during the week and gained a marginal 0.24% WoW, as earnings of major index movers (PSO and OGDC) failed to excite investors.
  • The euphoria witnessed in the recent laggard IPP HUBC was nullified by OGDC on concerns of strike price of privatization deal to be set at a discount to market price.
  • World Bank approves 3 loans for Pakistan worth USD1.125bn
  • ADB approved US$400mn loan for Pakistan to support power sector reforms
  • PSO seeks release of PKR150b to avert default
  • Sell-off of OGDCL, PPL & UBL: road shows being held in second week of May
  • Above expected CPI dampened the bullish market sentiment
  • Federal Board of Revenue (FBR) witnessed a shortfall of PRs29bn in April 2014 as an amount of PRs167bn (+8.69% YoY) was collected against a target of PRs196.4bn
  • Government plans to launch a sukuk of PRs42bn in the first week of May to facilitate liquidity-rich Islamic Banks, for the first time since March 2013. Finance Minister hinted at launching a dollar denominated sukuk in the international markets as well, after the recent success of Eurobond issue
  • Meezan Bank approved detailed guidelines on converting a conventional bank into an Islamic Bank, which pertains to the Bank’s intended acquisition of HSBC Bank’s Pakistan
  • Auto sector once again came into limelight as reportedly a plan to reduce import duties on vehicles is being finalized
  • Result season was full of twist and turns. Result of banking sector was fairly impressive and cement sector was upto the mark
  • Analyst anticipations were broadly beaten by the result of PSO, as the company announced earnings of PKR13.25/share taking 9MFY14 to a cumulative of PKR71.39
  • In addition NML also announced its quarterly result which was also far below analyst anticipation, primarily the exchange rate appreciation may have dented the operating margins
  • DGKC, Vision holding (owners of PIOC) and KOHC have shown interest in acquisition of Lafarge Cement Ltd. Incase DGKC acquires LPCL, they may forgo their plans of expanding in the south zone which may keep the cement industry price mechanism intact 
  • Government of Pakistan has imposed 5% custom duty on the import of cotton yarn following a massive increase in the import of cotton from India during FY14
  • Cement retailers have increased price of the commodity by PKR5/bag to PKR520 to PKR535/bag in Karachi
  • Government of Pakistan cuts diesel price by PKR4.51, petrol 34 paisas. According to a notification issued by OGRA the price of HSD reduced by PKR4.51/litre, Kerosene by PKR3.08/litre and LDO by PKR0.93/litre
  • Engro and SSGC have agreed to import and distribute LNG to the country
  • In a discount rate cut scenario, leverage players such as Efert, Engro Corporation, Fatima and small cement players are likely to gain attention, while double-digit yields of Kot Addu Power Company (Kapco), NCPL, NPL, National Bank of Pakistan (NBP) and FFC would become even more attractive
  • The week saw foreign portfolio investment inflows of $11.08 million as compared to $18.55 million last week
  • Government delaying Pakistan Internationl Airlines (PIA) and Oil and Gas Development Company Limited (OGDCL) privatisation and Zong opting to pay $516 million for 3G / 4G licence without delay
  • With the budget for the next fiscal year set to be announced in the coming month, speculation also crept into the market resulting in a cautious approach by investors and some negative sentiment towards particular sectors
  • Hub Power Company (the largest Independent Power Producer in the country) was the star performer as it rose 7.2% during the week as it announced earnings slightly above expectations

Top ten gainers of last week were: National Foods, Pak Tobacco Co., EFU Life Assur Ltd., Pace (Pak) Ltd., Hub Power, Jah.Sidd. Co., Kohinoor Textile, Pakgen Power Ltd., Askari Bank Ltd. and Hum Network Ltd.

Top ten losers of last week were: Pak Reinsurance, Ghani Glass, Netsol Technologies, Indus Motor, Pak Suzuki Motor, Jubilee Gen Ins, GlaxoSmithKline Pak., Soneri Bank, Century Paper and Pak Services.

Top ten volume leaders were: LPCL, MLCF, JSCL, BOP, KEL, FABL, AKBL, FCCL, HUBC, NIB and DGKC.

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

1 comment:

  1. Hello Traders,
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