Karachi Stock Exchange Weekly Analysis 15 June, 2014

The Karachi Stock Exchange (KSE) market was range bound during the week. The market witnessed upward trend in two of the five sessions, as it remained down due to the law and order concerns on militant attack at the Karachi airport. The KSE-100 index gained 222 points, or 0.8 percent, on week-on-week basis to 29,731 points against 29,509 points last week. Market liquidity; however, was lower as average volumes dropped by 17.5 percent on week-on-week basis to 215.6 million shares against 261 million shares.

KSE-100 index gained 222 points in the week but remained range-bound due to the lack of major triggers, while investors’ sentiment will evolve around foreign buying next week, as no major move is expected. On a WoW basis, the KSE-100 index rose 0.8%. Volumes fell 17.5% WoW with ADTO clocking in at 215.6 mn shares. FIPI has drastically declined from US$31.2mn last week, to US$12.6mn this week. We continue to believe the upcoming result season along with clarity over political front may energize the market. Nevertheless news flow seems quite weak and market is looking towards new triggers.
Following news have played vital role in Karachi Stock Market index movement:

  • Pakistan equities closed higher on buying from foreigners and excitement over privatisation of govt holdings in United Bank UBL PA +2.26%. UBL offered sale of 242 million shares with a floor price of Rs 155 per share
  • In 2007, the government sold its UBL shares at Rs206 per share and now it has sold the shares at Rs158, which was a manipulation, it should not have sold below the earlier sum
  • According to analysts, market response will remain negative next week, as investors were cautious over the government’s manipulation in the United Bank offer, which remained around 25 percent lower than the market rates. The same manipulation is likely in PPL, OGDCL and then HBL shares
  • The banks, in particular, remained in the limelight as a result of the successful book building of UBL’s privatisation
  • The week saw decline in the foreign portfolio investment inflows to $12.6 million as compared to $31 million last week
  • Mari Petroleum announced higher-than-expected production estimates from Ghauri field, which brought renewed interest in Mari and PPL
  • Textile sector also remained in the limelight in anticipation of favourable textile policy
  • News about government transferring lands to PTCL management also helped the stock post gains during the week
  • The World Bank approving the Dasu Dam project (positive for cement) and agreeing to give a loan of $700 million
  • On the macro front, Pakistan’s trade deficit shrank by 5.66 percent on year-on-year basis in 11 months of FY14 and foreign exchange reserves rose by $17.5 million to $13.457 billion
  • Any concessions on the government’s proposal to increase Gas Infrastructure Development Cess (GIDC) from the budgeted Rs300 per mmbtu can be a trigger for the fertiliser and textile sectors
  • Oil and Gas Development Company (OGDC) closed in red as the company will issue $850 million worth of Global Depositary Receipts (GDRs) in September 2014
  • PSO is facing imminent default on payments to international oil suppliers and is seeking a bailout in the face of long delay on the part of power producers to pay for fuel supply. PSO had defaulted on international payments last month and international banks have refused to open LCs for oil import. PSO has to make a total payment of PRs93.34bn to Kuwait Petroleum Corporation and other fuel suppliers  
  • The statement from Mr. Dar about possible completion of transfer of properties and payment by Etisalat of USD798mn kicked started PTCL upsurge
  • The political warfare has once again heated‐up along with General Musharraf’s name being removed from ECL. Probably with a passage of time the Ex‐president is likely to leave the country
  • Hascol oil storage installations launched: Hascol becomes 2nd largest oil importer in Pakistan
  • Power shortfall has jumped to 3600MW with increase in demand, both domestic and commercial. NTDC, power generation during last 24 hours stood at 13,700MW against a demand of 17,300MW, leaving the system with a total shortfall of 3,600MW 
  • The divestment of GoP 5% holding In PPL will be held by the end of June 2014 in the domestic market, Privatization Commission Chairman

Top ten gainers of last week were: Grays Of Combridge, Hum Network Ltd, Sui South Gas, Mari Petroleum, Pak Tobacco Co.XD, Colgate Palmolive, Lotte Chemical Pakistan, Atlas Honda Limited, Cherat Cement and Engro Foods Ltd.

Top ten losers of last week were: Shell Pakistan, Shifa International Hospitals, Pakistan Cables, Nishat Chunian Power, Rafhan Maize Prod., Pak.Int.Con.XDXB, Feroz 1888 Mills Ltd, National Foods, Agritech and Bata (Pak) Ltd.

Top ten volume leaders were: TRG, KEL, FCCL, LOTCHEM, BOP, NBP, PTC, MLCF, PTC, LPCL, MLCF, SSGC, and SNGP.

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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