Karachi Stock Exchange Weekly Analysis 11 January, 2015

The Karachi Stock Exchange (KSE) market remained upbeat for a third consecutive week with KSE-100 rallying 1.8% WoW (593pts) prior to upcoming monetary policy announcement next week. The market set a new all-time high this week, rising 1.8%WoW to close at 33,325 points. KSE-100 index closed on 33,325 by gaining 593 points or 1.8% while KSE-30 index closed on 21,620 by gaining 386 points or 1.82%.

Trading activity continued its upward trend, picking up by 19% WoW, and averaged at 203mn. Foreigners remained sellers, selling USD6.1mn worth of shares. Investors shall continue to be watchful of foreign outflows, while DR cut expectation (we expect 100bps cut) in upcoming monetary policy will keep interest alive in yield and leveraged plays. Because, Initially lower inflation numbers in the month of December’14 and reduction in petroleum prices signalled the discount rate cut.

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

  • E&Ps defied international oil prices with the sector gaining 3.7% WoW. OGDC, PPL and POL increased 4.7%, 3.6% and 3.8% WoW. Dairy stocks also remained in limelight with NESTLE and EFOODS gaining 21.2% and 3.6% WoW
  • Pakistan’s total crude oil production crossed the 100,000 bpd mark, the highest for the country
  • NESTLE, OGDC and DAWH contributed 165pt, 116pts and 98pts to index during the week
  • Power sector receivables soar to PKR590bn
  • Plan finalized to set up 5,600MW projects
  • Cement sales up 6% in July-Dec
  • Yield on T-bills slashed
  • EFERT recently signed an agreement with Guddu Thermal Power Station (GTPS), for right to use 60mmcfd temporary gas until Dec-2015
  • The activity from corporate, banks and mutual funds remain robust where majority of them were active on the buying side
  • News related to closure of 650MW electricity supply to KEL from national grid created a panic amongst KEL lovers
  • In the preceding few days robust activity was seen in NESTLE where the stock gained nearly PKR1,925/share in the outgoing week
  • Pakistan’s per capita income rose by 10.9% to PKR143,808 for the FY14 pared with PKR129,569 in the previous year as the country is on track to transform its economy, the SBP
  • The country is poised to produce bumper cotton crop this season FY15 as phutti (seed cotton) arrivals jumped 10.16% to 13.96mn bales up to January 1, 2015 compared to 12.670 mn bales in the corresponding period last season FY14. Both Punjab and Sindh recorded higher cotton production this season
  • Forex reserves inch up to US$15.21bn
  • Fauji Fertilizer seeks justification for gas supply to Engro
  • A case involving losses of PRs13.9bn in the Bangladesh branch of National Bank of Pakistan (NBP) will be sent to the National Accountability Bureau (NAB) for investigation
  • Investors are also excited about the upcoming earning season with the banking and fertilizer sectors due to announce their full year earnings for 2014. The banking sector in particular is expected to post record earnings and has witnessed significant gains in the past few weeks

Top gainers of last week were: Nestle Pakistan, Dawood Hercules Chem, NIB Bank, Shifa International Hospitals, Bata (Pak) Ltd., Pak Suzuki Motor, Attock Refinery Ltd., P.T.C.L.A, Pakgen Power Ltd. and Century Paper.

Top losers of last week were: Pak Tobacco Co, Colgate Palmolive, Grays Of Combridge, Nishat Chunian Power, Muree Brewery Co Ltd, Avanceon Ltd, Abbott Lab, Arif Habib Corp, EFU Life Assur Ltd. and Nishat Power Ltd.

Top ten volume leaders: KEL, JSCL, MLCF, NIB, ENGRO, FCCL, PTC, FATIMA, AICL, DGKC, and BOP.

Following are few BUY recommendations:

Fatima Fertilizer Co. (FATIMA) - BUY
Current Price: PKR 37.27
Target Price: PKR 43.00

Oil & Gas Development Co. (OGDC) – BUY
Current Price: PKR 218.31
Target Price: PKR 282

Pak Oilfields (POL) – BUY
Current Price: PKR 399.6
Target Price: PKR 538.3

Pakistan Petroleum (PPL) – BUY
Current Price: PKR 186.14
Target Price: PKR 221

Allied Bank Limited (ABL) – BUY
Current Price: PKR 113.19
Target Price: PKR 177.00

Habib Bank Limited (HBL) – BUY
Current Price: PKR 217.54
Target Price: PKR 262.00

United Bank Ltd (UBL) – BUY
Current Price: PKR 174.3
Target Price: PKR 210.0

Bank Al-Falah (BAFL) – BUY
Current Price: PKR 33.92
Target Price: PKR 39

Pak Suzuki (PSMC) – BUY
Current Price: PKR 392.11
Target Price: PKR 495.00

Engro Polymer Chemicals (EPCL) – BUY
Current Price: PKR 13.4
Target Price: PKR 16.5

Following are few SELL recommendations:

Kot Addu Power Co (KAPCO) – SELL
Current Price: PKR 79.67
Target Price: PKR 58.0

Nishat Power Ltd (NPL) – SELL
Current Price: PKR 45.53
Target Price: PKR 38.00

Pakgen Power Ltd. (PKGP) – SELL
Current Price: PKR 31.47
Target Price: PKR 24.00

Engro Corporation (ENGRO) – SELL
Current Price: PKR 246.0
Target Price: PKR 196.2

Dawood Hercules Limited (DAWH) – SELL
Current Price: PKR 102.4
Target Price: PKR 71.8

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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