Performers of the year

KARACHI: Equity market provided a 35 per cent return in the fiscal year 2010 after a record fall in fiscal year 2009, according to an analyst.

Besides the blue-chip companies in exploration and production (E&P) and fertiliser sectors, performance of second-tier stocks - Lotte Pakistan and Indus Motors - was exceptional as both of these stocks outperformed the broader index by 163 per cent and 111 per cent respectively, according to Topline Securities.

Stock market returns are the amount that an investor generates out of the market. This return can be in the form of profit through trading or in the form of dividends given by the company to its shareholders.

On the other side, cement, refineries and insurance companies underperformed in the period under review, said Topline Securities analyst Furqan Punjani.

Auto, fertiliser and E&P lead the way

The outgoing year was good for automobile stocks as improving macroeconomic situation and enhanced consumer confidence in the economy boosted car sales by 39 per cent in 11 months of the current fiscal year, said Punjani. Particularly Indus Motors stock, which outperformed the index by 111 per cent primarily because of the popularity of the new model Corolla.

“Investor consideration for defensive scrips and earnings growth amid higher oil prices came out as the success stories for fertiliser and E&P sectors,” said the analyst.

Fauji Fertiliser Bin Qasim Limited (FFBL) and Engro outperformed the index by 38 per cent and 23 per cent respectively while Oil and Gas Development Company and Pakistan Oil Fields were sector movers of E&P in fiscal year 2010. Huge foreign buying in OGDC also contributed to this rally.

Apart from other regular traded scrips, one scrip that kept the investors attention throughout the year was Lotte Pakistan. Record margins and acquisition by KP Chemical group were the primary reasons of higher returns by Lotte stock. The scrip outperformed the index by 163 per cent and remained the top performer among the analyst’s sample companies.

Laggards: cement and refineries

Lower cement prices because of competition among manufacturers was the major reason for the poor performance of the cement stocks, said Punjani.

This is why the two major scrips in this sector - Lucky Cement and DG Khan Cement - underperformed by 20 per cent and 50 per cent respectively, added Punjani.

Refineries underperformed because of negative fuel and refining margins and ongoing pricing issues. This resulted in National Refinery Limited and Attock Refinery Limited posting negative gains of 45 per cent and 70 per cent respectively.

Published in The Express Tribune, June 30^th, 2010.