Karachi Stock Exchange Weekly Analysis 24 June, 2012


The Karachi Stock Exchange (KSE) market was lacklustre because of political uncertainty (Supreme court verdict against Yousaf Raza Gillani). KSE – 100 index has reached 13,730.82 points by gaining 65 points or 0.48 percent. While KSE 30-share Index enhanced by 79.67 points, or 0.67 percent, during the week and closed at 11,866.54 points.  According to experts, Shares at the Karachi Stock Exchange (KSE) are expected to book some gains in their prices next week ahead of fiscal year 2011/12’s closing on June 30.

The timid sentiment was vindicated by the decline in average volumes, down by 20%WoW to 69 million shares. Foreigners too remained cautious as they sold shares worth US$6.3 million. Foreigners may continue to offloading positions due to depreciations of Pak Rupee against the US dollar and other currencies.

The current account deficit (CAD) in May-12 was reported at US$ 414mn, while the 11MFY12 CAD registered at US$3.77bn as against a meager deficit of US$79mn reported in the same period last year. The worsening of the CAD is due to higher trade deficit (including goods and services) which rose by 47%YoY during the period. Foreign flows in the same period have also been disappointing with Net foreign investment dipping by 61%YoY to US$721mn in 11MFY12. The fall came on the back of energy crises and law and order situation. Foreign direct investment (FDI) dropped by 48%YoY to US$756.4 in 11MFY12 while foreign portfolio investment (FPI) registered an outflow of US$35mn in the same period.

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


  • Investors have opted to remain sideline because of the uncertainty in political front
  • Weak economic data (May’12 CA deficit up 50%MoM) due to which turnover remained relatively thin at the KSE
  • Sharp fall in commodity prices, particularly oil coupled with the weak PkR/US$ parity added to the sell-off during the week
  • Additional ambiguity for investors came as a result of the current US-PAK impasse
  • Pakistan weight-age remained unchanged in MSCI FM as U.A.E and Qatar didn’t get an upgrade to Emerging Market status
  • SNGPL has suspended the gas supply to Enven
  • The KSE informed that the benchmark KSE‐100 index will move to free float methodology, effective Oct 1st 2012
  • As per latest numbers released by Pakistan Bureau of Statistics (PBS), Large Scale Manufacturing (LSM) witnessed a growth of 1.02% in 10MFY12
  • 80 K tons of urea has been imported to Gawadar (50k) and Karachi (30k) ports. While the final consignment of another 30k is expected on 22nd June
  • Government of Pakistan has raised PRs. 48.8 billion from Ijara Sukuk option
  • Lower than expected FED cut (PKR5/bag), imposition of cess on captive plants, rumors of disconnect gas supplies to captive plants and steep decline in PKR value has led LUCK to underperform broader index by 9% in last 2 weeks
  • After a long delay, NEPRA has finally notified the post‐COD reference tariff for HUBC Narowal Power Project (HNPP)


SNGP, PSMC, OGDC, FFC, EFOODS, Mari Gas, Indus Dyeing, Pakistan Reinsurance, Bank Alfalah, Allied Bank, PPL, Fatima Fertilizer, Attock Petroleum, and E.F.U. Life Assurance were the major gainers while K.E.S.C., NML, LOTPTA, E.F.U. Gen. Insurance, AICL, INDU, PTC, Media Times Limited, Bestway Cement and Rafhan Maize were major losers in the benchmark KSE-100 this week.

Top volume leaders of last week were JSCL, DGKC, EFOODS, FFBL and ENGRO.

From an investment perspective, we see value in accumulation of fundamentally strong names such as PPL, APL, PSO, OGDC, POL, Hubco and NCPL in the energy sector, and MCB among banks. Other than this, Fatima Fertilizer and EFoods also warrant closer attention given sound business profiles and attractive upsides.

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

Karachi Stock Exchange Weekly Analysis 17 June, 2012


The Karachi Stock Exchange (KSE) market was bullish because of approval of the finance trading bill by National Assembly. KSE – 100 index has reached 13,665.80 points by gaining 107.10 points or 0.78 percent. The KSE 30-share Index surged by 77.91 points, or 0.66 percent, to 11,786.87 points.

According to experts, The Karachi Stock Exchange (KSE) is expected to slightly improve next week, as it is stable now after absorbing major technical sell-off seen in the weeks prior to the outgoing one. The market may cover miles in the upward direction if Pakistan-US ties improved with particularly regarding NATO supply lines issue. If the supplies are restored, this will help ease external pressure on Pakistan’s economy, as the United States would reimburse those funds, which Pakistan has so far spent on the war on terror. This will also stabilise the rupee in parity with the dollar and other major currencies and convince foreign investors to stage a come back in Pakistan.

The turnover decreased 12.28 percent and traded 109.14 million shares as compared to previous week’s 124.43 million shares. The average daily turnover fell by 9.3 percent to 86 million shares from 95 million shares traded in the previous week. Market capitalisation, however, surged by Rs22 billion to Rs3,490 billion.

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

  • National Assembly has approved the finance bill, which has cleared all the ambiguities regarding CGT (Capital Gain Tax) regime helped in drawing interest of investors
  • The stability has returned in notable commodities (such as crude oil) at world markets. This should pave the way for improvement at the local bourses
  • Cement offtake for May increased by 5 percent on yearly basis
  • Lucky Cement interested in acquiring 75.8% stake in ICI Pakistan
  • In the previous week, foreigners sold net stocks worth $83.6 million. This included the strategic divestment of 200 million shares of Hubco at Rs31 per share, totaling to $66 million
  • Punjab government in its provincial budget announced continuation of the Yellow Cab and Green Tractor scheme for fiscal year 2012-13. That’s why PSMC (Pak Suzuki Motors Company Limited), which is the major beneficiary of Yellow cab scheme outperformed the market by 4.6 percent
  • The international power deal of Hubco was finally executed this week, which would result in Hubco being largely owned by local investors
  • As per recent data released by SBP (State Bank of Pakistan), remittances in May‐12 grew slightly by 4% MoM to US$1.19bn. Cumulatively in 11MFY12, remittances are up 19.5% to US$12.07bn in 11MFY12 due to improved banking channels
  • The MSCI Annual Review (due on 20th June) could instill some life in the market if Pakistan related positive takeaways emerge.

Philip Morris Pak Ltd, Media Times Limited, Standard Chartered Bank, Rafhan Maize, HUBCO, Fauji Fertilizer Bin Qasim, DGKC, HBL, PTCL, UBL, Lafrage Pakistan, ICI Pakistan Ltd, Nishat Mills Ltd, and Pak Suzuki Motors were the major gainers while Sui Northern Gas Ltd, Unilever Pakistan Foods, Ibrahim Fibers, Indus Dyeing, PSO, Lucky Cement, and Pakistan Tobacco Company were major losers in the benchmark KSE-100 this week.

Cement sales in 11 months of fiscal year 2011-12 stood at 29.5 million tonnes, up by 3.0 percent on yearly basis. The growth was largely driven by improved local sales, up 8.0 percent. In May alone, cement sales were recorded at 2.9 million tonnes (up 5 percent) in which local despatches surged by 10 percent on yearly basis while exports were down 6.0 percent. However, during the week construction and material sector underperformed the market by 1.3 percent.

Hubco remained in the limelight because of the National Electric Power Regulatory Authority’s notification regarding the post Commercial Operation Date (COD) Narowal tariff. It is expected to positively impact the earnings of the company. During the week, Hubco outperformed the market by 3.6 percent.

We see value in accumulation of fundamentally strong names such as PPL, APL, PSO, OGDC, POL, Hubco and NCPL  in the energy sector, and MCB among banks. Other than this, Fatima Fertilizer and EFoods also warrant closer attention given sound business profiles and attractive upsides.

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

Karachi Stock Exchange Weekly Analysis 9 June, 2012


The Karachi Stock Exchange (KSE) market was bearish. KSE – 100 index has reached 13,559 points by losing 317 points or 2.3 percent.

Average volumes also reflected the limited interest in the market as they plunged by 32%WoW to 95mn shares. Foreigners too were downbeat as they sold shares worth US$16.8 million.

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


  • State Bank of Pakistan (SBP) has adopted to keep the discount rate unchanged (12 %), as per expected
  • Despite the positive budget, investors were remain cautious
  • Investors especially the foreigners, have some serious concerns regarding US and Pakistan tension on the issue of reopening NATO supplies
  • Investors are also concerned over exclusion of decrease in gross turnover tax rate from 1% to 0.5% in the Finance Bill 2012, increase in GIDC on the fertilizer sector, lower than earlier expected decrease in FED for cement sector, and increase in tax rates for banks on dividend income earned through money market/income funds
  • Pakistani Rupee is continuously depreciating as compare to US$
  • Weakness in oil prices have also witnessed, which caused POL to underperformed the market by 1.6%
  • SNGPL has notified to resume the gas supply to ENGRO by 10 June, 2012
  • NRL cuts base oil prices by PRs 7.15 per litre
  • Cement Sales were up 10% YoY during the month of May, taking 11MFY12 numbers to 21.7mn tons, up 9% YoY
  • Government has raised PRs35.7bn through PIB auction


Grays Of Cambridge, ENGRO, Rafhan Maize, Bata (Pakistan), Nestle Pakistan Limited, Jahangir Siddiqui, Azgard Nine Limited, Pakistan Services Limited, Meezan Bank, Philip Morris (Pakistan) Limited, Kohinoor Energy Limited, Murree Brewery Company Limited,  and IGI Insurance were the major gainers while Media Times Limited, Agritech Limited, BYCO Petroleum, P.I.A.C. (A), Ibrahim Fibre Limited, ENGRO Foods,Pak Electron Limited, Pakistan Telecommunication, Gharibwal Cement Limited,  NBP, DGKC and Pace (Pak) Ltd were major losers in the benchmark KSE-100 this week.

A cherry picking approach is suitable in the current environment and we advise an accumulation stance on PPL, APL, PSO, OGDC, POL, Hubco and NCPL (our top picks in the energy chain). In the banking space, MCB is our preferred play while EFoods also warrants a closer look. Among fertilizers, Fatima emerges as our top pick owing to its shield from sector gas supply woes and fixed input costs.

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

Karachi Stock Exchange Weekly Analysis 3 June, 2012


The Karachi Stock Exchange (KSE) market was range bound and activities were remain stagnant. KSE – 100 index has reached 13,876.97 points by losing 48.09 points or 0.34 percent. According to experts and analysts Karachi Stock Exchange (KSE) benchmark 100 – index will reach the psychological level of 14,000 points in upcoming week because the federal budget 2012-13 for multiple sectors would have a neutral – to – positive impact on market.

The average daily turnover fell by 10 percent to 141 million shares from 156 million shares in the previous week. Market capitalisation declined by Rs10 billion to Rs3,552 billion. And foreigners sold net shares worth $0.01 million.

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


  • Unresolved NATO supply issue coupled with worsening law and order situation in the city hurt investor sentiment. But there are hopes over normalization of Pak-US ties with reference to NATO supply lines would also have a positive impact especially for foreign portfolio investors
  • The massive reduction in crude oil prices in world market would also relief the economy from external front 
  • Pakistani Rupee has been depreciated against US$ to the record lowest value of history
  • Uncertainty in political front, widening fiscal deficit, energy shortfall and declining exports may adversely affect the sentiments of investors
  • Government has announced cut in petroleum prices up to 7.9%
  • Prime Minister of Pakistan, Yousaf Raza Gilani, does not file appeal in contempt case
  • As per the media reports, the government is considering to levy 16% GST on printed price (retail price) of cement, fertilizers and bottled water instead of current application of GST on ex‐factory price with an objective to minimize exceptional increase in dealer margin and increase sales tax revenue
  • Next monetary policy was due in mid-June and given conflicting political and economic considerations, will be keenly watched
  • The revival of ties would pave the way for the receipt of $400 million reimbursements under Coalition Support Fund in June


Attock Refinery, P.I.A.C. (A), Silkbank Limited, IGI Insurance and Shifa Int Hospitals Ltd were the major gainers while Media Times Limited, Unilever Pakistan Foods, Pak Services, TRG Pakistan and Pace (Pak) Ltd were major losers in the benchmark KSE‐100 this week.

We advocate a cherry picking approach and advise an accumulation stance on PPL, APL, PSO, OGDC, POL, Hubco and NCPL (our top picks in the energy chain). In the banking space, MCB is our preferred play while EFoods also warrants a closer look. With the fertilizer sector continuing to face pressure on both sales volume and margins in addition to gas supply woes, Fatima Fertilizer emerges as top pick in the sector.

According to experts, cement and fertilizer stocks may jack up share prices. The reduction in federal excise duty for cement by Rs100 per ton to Rs400 should continue inviting investors’ attention towards relevant stocks. Though the government has proposed an additional gas cess of Rs103/mmbtu for fertilizer manufactures but it would not impact earnings of concerned companies in the quarter to be ended on June 30, 2012. Moreover, the proposal would also help fertilizer companies attracting dealers to buy its ready stocks in stores. Thus, it would help fertilizer companies to offload heavy inventories of fertilizer before the quarter to be ended and show cash on balance sheet.

Furthermore, a news report regarding the hike in gas development surcharge kept investors interested in the chemicals sectors.

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