Karachi Stock Exchange Weekly Analysis 31 May, 2014

The Karachi Stock Exchange (KSE) market movement was bullish because of strong foreign inflows in blue chips and expected relief from below than scheduled hike in capital gains tax. KSE - 100 index closed at 29,737 by gaining 981 points or 3.4 percent.

On WoW basis, KSE-100 index went up 3.4%. Volumes rose 57% WoW with ADTO clocking in at 235mn shares. FIPI surged by a whopping 348% WoW to US$29.6mn. Volumes shot up 57% as investor confidence revived on the back of foreign buying coupled with positive news about the upcoming budget and continuous improvement on the macroeconomic front.
Following news have played vital role in Karachi Stock Market index movement:

  • Index heavyweights MCB Bank Limited, Engro Corporation, United Bank Limited, Pakistan State Oil and Lucky Cement primarily buoyed the momentum, while mid-tiers also continued bullish momentum
  • The week saw foreign portfolio investment inflows with huge increase to $29.6 million as compared to $6.3 million last week
  • During the meeting with Tax Advisory Council (TAC) and the Minister of Finance, representatives of stock exchanges, have proposed the govt to raise capital gains tax (CGT) to 12.5% (from the current level of 10% and scheduled increase to 17.5%) on holdings less than 6‐mths
  • Federal Budget FY15 is scheduled to be announced on 3rd June, 2014
  • Announcement of strong PSDP figures along with mega infrastructure projects would continue to drive cement sector performance ahead
  • The upcoming week is likely to kickoff with an announcement of inflation numbers followed by yearly economic numbers and finally the most crucial announcement of budget FY15
  • Cement stocks did came back strongly after staying in a shell for quite some time
  • Possible bidding of LPCL on June 6, 2014 is likely to keep cement sector active
  • Despite pre‐budget turbulence in the market, rumor related to CGT, extension in tax amnesty and foreign inflow kept the market in green territory in the last few days
  • PM attractive tariff for coal‐fired power plants has drawn international investors' interest in power projects. Premier chaired a meeting held to review the pace of work on Gaddani Power Project here. He approved two additional coal‐fired power plants to be constructed in Gaddani. PM was given a detailed briefing on the status of power projects 
  • Import of motorcycles, new and used, registered a sharp increase while arrivals of second‐hand cars tumbled during the10MFY14
  • The SBP has issued instructions to all commercial banks that effective June 1, 2014, minimum rate of return, on average monthly balances, shall be applicable on all new and existing savings products (including any other profit‐bearing deposits with no fixed maturity), except term deposits 
  • OGRA opposes transport cost of PKR0.15/litre to Byco Refinery
  • FG that it has decided to take the case of KEL to the SC as the company is still getting 350MW from national grid in alleged violation of a decision of the CCI
  • The banking sector remained in the limelight as banks refused to participate heavily in the T-bill auction conducted during the week, preferring to keep investing in PIBs instead
  • In important announcements, ICI announced its intention to invest Rs960 million in Morinaga business, while Kapco gained two percent; following announcement to conduct feasibility study of 660MW coal-based power project

Top ten gainers of last week were: Mari Petroleum, Pak.Int.Con., Shell Pakistan, Abbott Lab, K‐Electric, Agritech, United Bank, Muree Brewery Co Ltd, Engro Corp and National Foods.

Top ten losers of last week were: Millat Tractors, Pakistan Cables, Shifa International Hospitals, EFU Life Assur Ltd., Sui South Gas, Soneri Bank, TPL Trakker Ltd, Cherat Cement, Hub Power and Askari Bank Ltd.

Top ten volume leaders were: KEL, LPCL, TRG, MLCF, BOP, FCCL, NBP, JSCL, ENGRO, DGKC and PSO.

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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