Weekly review: KSE-100 posts 227-point gain despite late-week profit-taking

Stability in oil prices and foreign buying helped index end week higher

KARACHI:

The stock market continued its upward drive this week, albeit at reduced pace as late-week profit taking trimmed gains, resulting in the benchmark KSE-100 index finishing with a 227-point (0.7%) increase during the week ended March 11.

Continued stability in crude oil prices coupled with foreign buying and a jump in global commodity prices helped the index make early gains before profit taking kicked in during the latter half of the week. Mixed news for the fertiliser and cement sectors also impacted the market during the week.

The week started off strongly with the KSE-100 index climbing 581 points and crossing the 33,000-point barrier on Monday on the back of crude oil prices hitting $40 per barrel and continued positive sentiment from last week’s announcement of Engro Corporation selling 51% stake in Engro Foods to a Dutch company.

However, the latter half of the week saw profit taking, especially in the banking and cement sectors. The fertiliser sector also came under pressure due to news of the government planning to reduce fertiliser prices. The KSE-100 index shed 364 points in the final three days to end the week at 32,669.

Oil prices were the major stimulus for the market as they continued to surge and crossed $40 per barrel early on during the week. With higher cost producers curbing production, OPEC’s strategy to price them out showed signs of success and prices managed to remain steady above $40 per barrel throughout the week.

As a result, the heavyweight oil and gas sector continued its resurgence with Pakistan Petroleum Limited, the Oil and Gas Development Company and Pakistan Oilfields posting gains of 5.5%, 3.5% and 3.5%, respectively during the week, providing major support to the index.

The fertiliser sector had a mixed week. The sector started the week strongly as Engro Corporation’s share price rose, but swung the other way when news emerged that the government was considering importing urea to bring down the price of fertiliser and putting an end to cartelisation practices of local manufacturers.

Similarly, cements suffered a similar fate as the sector was boosted by strong interest from foreign investors, but was subject to profit taking in the latter half of the week due to persistent rumors of a price war between the major manufacturers.

After weeks of continuous decline in foreign selling, foreigners turned net buyers during the week and purchased a net of $4.1 million worth of equity, as opposed to net selling of $1.56 million in the previous week.

Average daily volumes shot up by 29.7% and were recorded at 175.2 million shares traded per day. However, most gains came in lower-priced scrips which resulted in average daily values climbing on 10.4% to Rs9.02 billion per day. The Pakistan Stock Exchange’s market capitalisation stood at Rs. 6.85 trillion ($65.4 billion) at the end of the week.

Winners of the week

Attock Cement



Attock Cement Pakistan Limited manufactures and sells cement and related products. The company is also part of the Pharaon group, which in addition to investments in the cement industry also owns interests in the oil and gas sector.

PTCL



Pakistan Telecommunication Company Limited provides fixed line domestic and international telephone services, telex, telegraph, fax and leased circuit services in Pakistan. The company owns all public exchanges, the nationwide network of local telephone lines, principal long distance transmission facilities and international telephone gateways in Pakistan.

TRG Pakistan



TRG Pakistan operates as an information technology company. The company provides business support and software services to other companies. TRG Pakistan manages call centres and offices located in Pakistan and elsewhere throughout the world.

Losers of the week

Associated Services Limited



Earlier called Latif Jute Mills Limited, the company is one of the industrial machinery and services firms in Karachi.

Allied Rental Modaraba



Allied Rental Modaraba operates an equipment rental company. The company rents branded power generators, material handling equipment and construction machines for all types of applications.

Packages Limited



Packages Limited manufactures and sells paper, tissue products, paperboard and packaging materials. The group has joint venture agreements with Tetra Pak International, to manufacture paper for liquid food packaging, the Mitsubishi Corporation, to manufacture polypropylene films, and Printcare (Ceylon) Limited, to produce flexible packaging materials in Sri Lanka.

Published in The Express Tribune, March 13^th, 2016.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.