Karachi Stock Exchange Weekly Analysis 27 December, 2014

The Karachi Stock Exchange (KSE) market movement was bullish. KSE-100 index closed on 31,993 by gaining 982 points or 3.17%, while KSE – 30 index closed on 20,780 by gaining 742 points or 3.70%.

Trading activity picked up by 18% WoW, with average daily turnover clocking in at 163mn. Foreigners, after four weeks of consecutive selling, turned net buyers and bought USD7.8mn worth of shares.

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

  • Release of IMF US$1.05bn, and supplementary fourth, fifth reviews and accompanying documents by the IMF setting the tone for crucial GoP policies to come
  • The broader market witnessed a sharp increase driven by gains in index heavyweight stocks primarily MCB, UBL, OGDC, HUBC and ENGRO cumulatively contributing ~524 points. IMF country report and military courts’ approval by Prime Minister boosted sentiment
  • Nepra approved a PkR2.97/unit reduction in power tariff for Nov’14 under a monthly fuel price adjustment formula but the government decided to pass on only PkR2.37/unit to consumers and keep the remaining PKR0.6 for debt servicing of Discos
  • According to a recent projection made by the IMF, Pakistan’s oil imports will stand at US$14.6bn in the current year, a decline of US$1.2bn compared to the purchases projected in the budget. Last year, oil imports stood at US$14.67bn. According to PBS, oil imports of the country fell 5.37% to US$6.11bn in the 5MFY15. In comparison, they stood at US$6.46bn in 5MFY14
  • SBP in its latest auction of T-Bills raised PkR44bn against the target of PkR75bn, with a high level of participation seen in the 12-month paper
  • A pullback seen in oil stocks on the back of stable international oil prices and swift moves against the menace of terrorism on the local front gave a breath of fresh air to the bourse
  • Penny stocks were once again grabbed centre‐stage as the week’s top volume leaders featured KEL, BOP and TRG
  • The upcoming earnings season and anticipation of dividend generated healthy interest in fertilizer plays whereby Fauji twins and EFERT both featured in a savvy investors buying list
  • PTI decides to stage come back to parliament
  • 10-64pc increase in gas tariff on the cards
  • UBL, HBL and MCB all marched into positive territory during the week. Expectations of continued monetary easing and a further cut in DR in the next MPS lifted leveraged cement plays spearheaded by MLCF and FCCL
  • NIB, BOP and UBL were amongst the top gainers during the week, while MARI, ICI and ABL featured amongst the top losers
  • ENGRO and EFERT remained in limelight on last trading of the week with news reports of continuation of temporary 60mmscfd gas supply
  • Engro striking deal to install gas booster compressor
  • Luscious dividend yield of blue chip IPP’s such as HUBC and KAPCO kept their price stout as fixed income yield seekers ran short of suitable avenues in the wake of receding bond yields in the money market
  • Government denies complete relief to the power consumer
  • ECC approves subsidy on sugar export, reduces duty on potato export
  • US to give Pakistan USD1bn as Obama signs massive defense budget
  • Unproductive IPPs to be revived on take-and-pay tariff basis
  • Reserves cross US$ 15 billion
  • IMF predicts 5% growth, reduction in inflation
  • Russia earmarks US$ 7 billion investment
  • ECC approves funds for NBP to bridge Bangladesh shortfall
  • PSM is unable to gain benefit from the slight increase in its production due to arrival of steel products from various illegal channels. Though Blast Furnace no. 2 became operational earlier this week after 15‐months of inactivity, the mill is facing serious problems as the steel market is swamped with untaxed, smuggled and under invoiced imported steel products
  • K‐Electric plans to invest USD2bn, in addition to USD1bn it invested to boost its generation, transmission and distribution network
  • BAFL has received subscription amount of PKR6.67bn in respect of IFC equity investment in the bank

Top gainers of last week were: Pak Tobacco Co, Arif Habib Corp, NIB Bank, Shifa International Hospitals, Colgate Palmolive, B.O.Punjab, United Bank, TRG Pakistan Ltd, Bata (Pak) Ltd. and Engro Fertilizer

Top losers of last week were: Muree Brewery Co Ltd, Mari Petroleum, Thal Limited, Pak Services, Archroma Pakistan, ICI Pakistan, Century Paper, PICIC Growth, Allied Bank and Indus Motor.

Top ten volume leaders: KEL, BOP, TRG, MLCF, NIB, ENGRO, JSCL, FCCL, SNGP, DGKC, and EFERT.

Following are few BUY recommendations:

Engro Polymer Chemicals (EPCL) - BUY
Current Price: PKR 12.2
Target Price: PKR 16.5

Engro Corp. Limited (ENGRO) - BUY
Current Price: PKR 223.50
Target Price: PKR 245

Oil & Gas Development Co. (OGDC) – BUY
Current Price: PKR 212.1
Target Price: PKR 302.1

Pak Oilfields (POL) – BUY
Current Price: PKR 387.3
Target Price: PKR 538.3

Pakistan Petroleum (PPL) – BUY
Current Price: PKR 179.40
Target Price: PKR 221

K-Electric Limited (KEL) – BUY
Current Price: PKR 9.2
Target Price: PKR 12.1

Pakistan Petroleum (PPL) – BUY
Current Price: PKR 177.38
Target Price: PKR 221.00

Attock Petroleum (APL) – BUY
Current Price: PKR 525.06
Target Price: PKR 612.00

Allied Bank Limited (ABL) – BUY
Current Price: PKR 110.49
Target Price: PKR 177.00

Habib Bank Limited (HBL) – BUY
Current Price: PKR 218.56
Target Price: PKR 262.00

Bank Al-Falah (BAFL) – BUY
Current Price: PKR 32.56
Target Price: PKR 39

Following are few SELL recommendations:

Kot Addu Power Co (KAPCO) – SELL
Current Price: PKR 79.55
Target Price: PKR 58.0

Nishat Power Ltd (NPL) – SELL
Current Price: PKR 45.51
Target Price: PKR 38.00

National Bank (NBP) – SELL
Current Price: PKR 67.41
Target Price: PKR 53.00

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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