Karachi Stock Exchange Weekly Analysis 8 February, 2015

The Karachi Stock Exchange (KSE) market followed the upward trend in the previous week, the market saw some profit taking during the week under review as the Index remained flat, closing at 34,657pts (up 0.62%WoW). KSE-100 index closed on 3 4,657 by gaining 213 points or 0.62% while KSE-30 index closed on 22,490 by gaining 198 points or 0.89%.

The market sustained its bullish momentum as the benchmark KSE-100 index crossed the psychological barrier of 35,000 during the said week. However, profit taking was seen at these levels. Average trading volumes increased by 10 percent WoW to 328 million shares per day. Market optimism was fueled by (soft January 2015 CPI inflation reading of 3.88 percent YoY, Pakistan successfully completing International Monetary Fund’s sixth review for release of $518 million and cut in National Savings rate by 150 basis points system. Foreigners remained net sellers in the week with an outflow of $42 million, while institutions were active buyers infusing bullish euphoria in the index.

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

  • Conclusion of successful talks between Pakistan and IMF over release of the 6th tranche of US$518mn
  • Approval by PC of the sale of 41.5% remaining stake (609.3mn shares) in HBL
  • Slashing of financing rates under EFS from 7.5% to 6% and rates for services charges under LTFF from 9% to 7.5%
  • Request for approval of US$800mn aid for Pakistan’s FY16 budget by the Obama administration
  • Increase in 7MFY15 tax collection by 12%YoY to PkR1.33tn
  • Driven primarily by the result season, volumes are expected to remain on the higher side with following companies scheduled to announce their results in the upcoming week: 1) EFERT (Feb 9), 2) ABL (Feb 10), 3) PTC (Feb 10), and 4) MCB (Feb 12)
  • OGDC’s results announcement soured an otherwise seamless ascent as earnings came in well short of street estimates
  • Increasing cement offtake especially in the north region re‐ignited interest in the sector, while anticipation of stellar earnings kept many stalwarts in the limelight
  • The GoP’s reiterated resolve to address the menace of circular debt unlocked further interest in PSO
  • High yielding Fauji twins in the fertilizer arena were in for another round of price increase as market participants attach high hopes with the group’s diversification initiative bearing fruit
  • KEL kept bleeding as uncertainty prevailed regarding renewal of its power purchase agreement with the centre. The sale of KEL shares by KES power was also undersubscribed as 775mn shares were offloaded against an offer of 1.38bn shares
  • Foreigners remained net sellers in the week with an outflow of USD42mn, while institutions were active buyers infusing bullish euphoria in the index
  • EFERT was seen racing to new highs amid anticipation of strong earnings and initiation of a dividend
  • Monetary easing has kept banks on the sidelines, whereby we expect the sector to take lead as the earnings season progresses with the likelihood of reporting an ascent in earnings due to higher PIB exposure
  • With the earnings season catching pace the market is likely to take direction from results announcements of big ticket companies
  • POL products: prices slashed but GST rate raised. The government wanted to reduce petrol price by as much as PKR10/litre but decided to increase sales tax on petrol due to huge losses the government was incurring under the head of sales tax. The rate of the existing GST (22%) has been increased to 27%
  • The record import of 320,000 tonnes of petrol this month may avert a supply crisis in the near future as prices are going to dip further from Feb 1
  • USD1bn bonds to be launched for overseas Pakistanis
  • NHA would start physical work on Karachi‐Hyderabad Motorway (M‐9) project soon
  • Pakistan’s leading food company has acquired another 16.5mn shares in BOK, increasing its shareholding in the bank to 12.45% from 10.8% earlier. The board of directors of Ismail Industries Limited had approved an expression of interest to control management of the bank in March 2012
  • Obama proposes over USD1bn civil, military aid to Pakistan
  • IMF approves release of 6th tranche of USD518m to Pakistan
  • A rebound in global crude oil prices was also witnessed during the week with the price of Brent crude jumping from $45 to $55 and resulting in recovery in the oil and gas sector

Top gainers of last week were: Jah.Sidd. Co., Avanceon Ltd, P.S.O., Maple Leaf Cem., PICIC Growth, Fauji Cement Company, Stand.Chart.Bank, NIB Bank, Pak Oilfields and Nishat Power Ltd

Top losers of last week were: Century Paper, Sui North Gas Pipe., Bata (Pak) Ltd., Sui South Gas, Searle Pak, Abbott Lab, Rafhan Maize Prod., Allied Rental Mod, Packages Limited and Pioneer Cement.

Top ten volume leaders: KEL, JSCL, FCCL, MLCF, EFERT, HUMNL, CHCC, PGF, BOP, ENGRO, and FFC.

Following are few BUY recommendations:

Maple Leaf Cement (MLCF) - BUY
Current Price: PKR 56.7
Target Price: PKR 68.00

Pak Oilfields (POL) – BUY
Current Price: PKR 387.7
Target Price: PKR 538.3

Nishat Mills (NML) - BUY
Current Price: PKR 132.5
Target Price: PKR 163.5

Allied Bank Limited (ABL) – BUY
Current Price: PKR 113.1
Target Price: PKR 140.0 

Kot Addu Power Co (KAPCO) – BUY
Current Price: PKR 81.41
Target Price: PKR 97.0 

Oil & Gas Development Co. (OGDC) – BUY
Current Price: PKR 217.09
Target Price: PKR 282

Pakistan Petroleum (PPL) – BUY
Current Price: PKR 178.01
Target Price: PKR 221.00

Attock Petroleum (APL) - BUY
Current Price: PKR 546.89
Target Price: PKR 626.00

Habib Bank Limited (HBL) – BUY
Current Price: PKR 210.42
Target Price: PKR 262.00

Bank Al-Falah (BAFL) – BUY
Current Price: PKR 33.65
Target Price: PKR 39

Pak Suzuki (PSMC) - BUY
Current Price: PKR 432.03
Target Price: PKR 495.00

Following are few SELL recommendations:

Hub Power Co (HUBCO) – SELL
Current Price: PKR 86.50
Target Price: PKR 71.00

Nishat Power Ltd (NPL) – SELL
Current Price: PKR 47.00
Target Price: PKR 38.00

Pakgen Power Ltd. (PKGP) – SELL
Current hn6Price: PKR 34.22
Target Price: PKR 24.00

National Bank (NBP) – SELL
Current Price: PKR 68.99
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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