Karachi Stock Exchange Weekly Analysis 29 June, 2014

The Karachi Stock Exchange (KSE) market rises on lowering of political noise.The KSE-100 index closed at 29,344, up 2.3% WoW or 652 points, as political tensions eased. Volumes rose 4.9% WoW with ADTO clocking in at 160mn shares. Average daily value traded was up 11% WoW to US$83mn. FIPI remained strong, rising over 3x WoW to US$15.44mn.

With Ramadan starting from next week, activity in the market may decline, as it has done historically. On average, volumes have fallen by 30% in the Ramadan months over the last three years. Inflation for June will be keenly watched; we are expecting it to clock in at 8.6%. The market is likely to take direction from the upcoming results season with excitement anticipated in the banking and cement sectors.
Following news have played vital role in Karachi Stock Market index movement:

  • Other major highlights of the week included National Assembly’s approval of Rs4.3 trillion federal budget, foreign exchange reserves crossing $14 billion mark, government fetching Rs39 billion at the T-bills auction and urea off-take clocking in at 408,000 tons in May, down by 16 percent on year-on-year basis but up by 58 percent on month-on-month basis
  • Oil, cement and banking stocks remained in the green ahead of better earnings expectations for June-quarter
  • OGDC was the primary benefactor contributing 172 points to the index along with MCB (+60 points) and PPL (56 points).
  • On corporate front, a significant event during the week was the book building of PPL at a floor price of PRs205, which has received overwhelming response, being oversubscribed by more than 2x
  • Forex reserves cross US$ 14 billion
  • PTC, however, bore the brunt of institutional selling as sentiment had turned sour on the reversal of ICH
  • PSO’s receivables surged above PRs180bn, with the company on the verge of default of PRs53bn to international suppliers, if the govt does not disburse cash. PSO has clearly GoP to clear dues worth PKR100bn if it wants to continue the supply of fuel to thermal power houses and thus ensure its promise of uninterrupted electricity during Ramazan
  • Mari Petroleum Company Limited (MPCL) has agreed to deposit PRs9.9 billion worth of reserves with the government by converting them into preference shares if the company is given an increase in gas price under the new proposed pricing formula 
  • Textile garment exports grew almost 31% in the first two months after the trade preference scheme came into force, according to official statistics released recently. Exports from Pakistan to the EU in the first two months of implementation of GSP+ have recorded a substantial increase over the comparative period of previous year,” said the Ministry of Commerce 
  • The cement space was greeted with increasing interest in LPCL as its takeover process nears a close and a reduced levy of GIDC approved in the finance bill FY15
  • SHFA (+20% W/W) made sharp advances amid realization of hidden value in the stock and re‐rating of its attractive multiples
  • Automobile assemblers primarily INDU will stay in the limelight due to expectations of a handsome payout at the year end, followed by PSMC which will keep the market upbeat on account of the earnings accretive Punjab Taxi scheme 
  • SITC will establish a new 35MW coal‐based power plant at Faisalabad. The PKR2bn Syndicated Islamic Finance Facility (Diminishing Musharaka) was jointly mandated to MCB, UBL, MEBL as a financial advisor and loan arranger 
  • GoP has raised PKR49.537bn through an auction of three‐year Ijara Sukuky SBP
  • PTA chairman called for investment in advanced 3G and 4G mobile broadband technologies in Pakistan to provide high quality mobile broadband services on a par with leading services around the world 
  • PM performed the ground‐breaking ceremony of the 4320MW Dasu Hydropower Project
  • OGDCL sacked all Nashpa oil field team members on alleged bn rupees worth crude oil theft and formed a six‐member high profile investigating committee to probe the matter. MD OGDCL taking strict action against the menace of oil theft removed 33‐ member field team including officials 
  • Sugar price climbed by PKR230/100 kilogrammes bag during the last one month in the wake of an alleged manipulation of the stocks by the sugar dealers. The price of 100kg of sugar bag reached around PKR5,350 to PKR5,370 in Akbari Mandi wholesale market – the largest wholesale grain market of Pakistan 
  • Leather sector exports are on the declining trend and, if the situation persisted, the Indian competitors will snatch further market share of Pakistan’s leather and leather goods, Pakistan Tanners Association Standing Committee on Gas and Infrastructure Chairman 
  • Foreigners’ interest remained robust during the week as foreign investors bought shared worth ~USD15.4mn against a mere USD3.6mn in the previous week

Top ten gainers of last week were: Shifa International Hospitals, Pakistan Cables, Lafarge Pakistan, ICI Pakistan, Rafhan Maize Prod., J.D.W.Sugar, Askari Bank Ltd., Sui South Gas, Pak.Int.Con and Muree Brewery Co Ltd.

Top ten losers of last week were: Colgate Palmolive, TRG Pakistan Ltd, PICIC Growth, Lotte Chemical Pakistan Ltd, Hum Network Ltd, Abbott Lab, Lucky Cement, NIB Bank, Ghani Glass and Agritech.

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

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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