Karachi Stock Exchange Weekly Analysis 25 January, 2015

The Karachi Stock Exchange (KSE) market continued its rally through the first half of the week before profit taking limiting the KSE-100 index to 34,027pts, still up by 0.71%WoW. KSE-100 index closed on 3 4,027 by gaining 241 points or 0.71% while KSE-30 index closed on 22,104 by gaining 305 points or 1.40%.

According to analysts profit taking could continue next week and 1 percent cut in DR will create positive impact on market movement. Key developments to watch out for include the finalization of Drug Policy and incoming results (including EFOODS, MLCF, POL, PPL, HCAR and FFBL). Trading activity was somewhat subdued as an average daily volume of 302mn shares was witnessed in the week depicting a decline of 9% W/W. Penny stocks took the top spot on the leader‐board as JSCL, LPCL, KEL and TRG grabbed the leading spots.

According to experts of http://www.karachistockexchange.org, following news have played vital role in Karachi Stock Market index movement:

  • 1 percent (100 bps) Discount rate cut has been announced in Monetary policy
  • A dearth of POL product supplies afflicted the country with the largest OMC, PSO suffering from liquidity pressures restricting its ability to import supplies, the GoP responded by shuffling major officials, while the PM reacted by releasing PkR17bn and later PkR51bn to PSO
  • The CA deficit expanded by 18%YoY to US$2.36bn, despite a surplus of US$76mn in Dec’14
  • Total liquid foreign reserves saw a second consecutive decline in two weeks coming in at US$15.02bn for the week ended 16 Jan’15, falling 0.2%WoW on account of debt servicing
  • LSM has registered growth of 2.5%YoY during 5MFY15 due to low production of steel and delay in sugar crushing
  • The recent laggard OGDC garnered investor interest with international oil price consolidating, and OGDC being relatively well placed to bear the brunt of lower oil. OGDC added 111 points to the index with fertilizer names FFC and ENGRO cumulatively adding 179 points to the index on rumors of fertilizers being exempted from the expected gas tariff hike
  • Foreigners remained net buyers, buying shares worth USD6mn, but shy of USD 17.6mn during the previous week
  • Rs 1.70 per unit increase: Ex-post facto approval accorded by ECC
  • SECMC can supply 660MW coal-based power if financial closure ready
  • Yields on T-bills cut to below 9pc
  • Chief Executive Hub Power Company (Hubco) Khalid Mansoor said Monday that Independent Power Producers (IPPs) are on the verge of collapse due to mounting circular debt which is hovering around Rs 220 billion
  • HUBC announced that it will set up 1,320MW coal‐based power plants next to its thermal power station at Hub in Baluchistan and gradually enhance coal based generation to 3,600MW
  • The expected approval of the long pending textile policy geared‐up momentum in textile plays with the Nishat’s blue chip leading the pack
  • The cement sector remained in the limelight in the second leg of the week upon LPCL’s share acquisition being announced at PKR19.4/share by the Bestway group from the general public. The acquisition price failed to excite investors as market pundits were expecting a higher rate
  • Anticipation of a stellar payout propelled the Fauji twins towards a new high with FFC scoring an unprecedented upper circuit
  • The automobile sector was spearheaded by INDU that witnessed steamy gains storming ahead of the 1K mark
  • A shadow of dark clouds kept chasing KEL as the stock traded in red for most part of the week with no extension insight of its supply agreement of 650MW electricity with WAPDA
  • PM ordered the suspension of three top officials of the MoP and the PSO chief connection with the week‐long petrol shortage in Punjab. After getting a briefing from the officials concerned, Mr Sharif suspended Petroleum Secretary, Additional Secretary Director General (Oil) and MD of the PSO
  • The current oil crisis has already brought down electricity generation by over 2,000MW, raising the deficit to 7,000MW and cutting supplies to half of the total demand of over 14,000MW. More power plants are likely to suspend working in a few days because they are running out of furnace oil, the power sector’s managers warned
  • Ismail Industries Limited (Candyland) is constantly increasing its shareholding in BoK and has acquired a total of 11.9mn shares in the last couple of weeks, a statement. Details disseminated by the BoK, Ismail Industries acquired 2mn shares on January 7, 2.5mn shares on January 9, 2.5mn shares on January 13, 2.5mn shares on January 14 and 2.4mn shares on January 15, from the open market, making it a total of 11.9mn
  • Punjab CM the government had decided to set up an LNG Power Park, which would produce 1,000 MW of electricity
  • Broadband services depict 40% growth with 3.79m subscribers
  • Pharmaceutical manufacturers sought a 15% increase in the prices of generic and branded medicines in order to protect the industry from financial losses
  • ECC of the Cabinet is likely to approve drug pricing policy. ECC meeting convened by FM is likely to take up a four‐point agenda. However, as usual, there is a possibility that some proposals may be circulated among the members of the ECC during the meeting for consideration and approval

Top gainers of last week were: Indus Motor, Mari Petroleum, Pace (Pak) Ltd., Engro Corp, Shezan International Ltd., Lotte Chemical Pakistan, Meezan Bank, P.S.O., Fauji Fertilizer Co. and Pakgen Power Ltd.

Top losers of last week were: Pakistan Cables, Colgate Palmolive, K‐Electric, NIB Bank, Nishat Chunian, National Foods, TRG Pakistan Ltd, Archroma Pakistan, Netsol Technologies and Nestle Pakistan.

Top ten volume leaders: JSCL, LPCL, MLCF, KEL, TRG, LOTCHEM, HUMNL, FCCL, ENGRO, NBP, and FFC.

Following are few BUY recommendations:

Engro Polymer Chemicals (EPCL) – BUY
Current Price: PKR 13.0
Target Price: PKR 16.5

Pak Oilfields (POL) – BUY
Current Price: PKR 379.9
Target Price: PKR 448.00

Nishat Mills (NML) – BUY
Current Price: PKR 133.9
Target Price: PKR 163.5

Allied Bank Limited (ABL) – BUY
Current Price: PKR 113.4
Target Price: PKR 140.0 

Oil & Gas Development Co. (OGDC) – BUY
Current Price: PKR 217.29
Target Price: PKR 282

Pakistan Petroleum (PPL) – BUY
Current Price: PKR 177.19
Target Price: PKR 221

Habib Bank Limited (HBL) – BUY
Current Price: PKR 212.36
Target Price: PKR 262.00

Bank Al-Falah (BAFL) – BUY
Current Price: PKR 33.70
Target Price: PKR 39

Pak Suzuki (PSMC) - BUY
Current Price: PKR 401.01
Target Price: PKR 495.00

Following are few SELL recommendations:

Indus Motors (INDU) – SELL
Current Price: PKR 1,075.2
Target Price: PKR 824.6

Engro Corporation (ENGRO) – SELL
Current Price: PKR 277.6
Target Price: PKR 196.2

Dawood Hercules Limited (DAWH) – SELL
Current Price: PKR 111.1
Target Price: PKR 71.8

Hub Power Co (HUBCO) – SELL
Current Price: PKR 83.91
Target Price: PKR 71.00

Kot Addu Power Co (KAPCO) – SELL
Current Price: PKR 80.48
Target Price: PKR 58.00

Pakgen Power Ltd. (PKGP) – SELL
Current Price: PKR 33.16
Target Price: PKR 24.00

National Bank (NBP) – SELL
Current Price: PKR 70.22
Target Price: PKR 53.00

Thank you very much for reading this article.

NOTE: The information posted in this blog /forum (http://www.karachistockexchange.org/) 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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