Weekly Review: Bulls resurface behind positive global, sector specific news

Formation of ICH, duty-free access to EU propel the bourse to 4-year high.

KARACHI: Investor interests at the local bourse this week was stimulated by both company specific and macro events as the market climbed 196.65 points (1.3% week-on-week) to finish at 15,450 points – a 53-month high.

Though investor sentiments remained dampened for most of the week as average trading volumes witnessed a downward trend falling 16% to 164 million shares, the bourse reached its climax on Friday after climbing 143 points, as the final trading session’s closing marks a re-run of levels last encountered in April, 2008. Foreign interest was intact as foreigners were net buyers of $2.7 million.

The telecommunication sector remained on the investors’ radar after the confirmation that the Ministry of Information Technology issued formal policy directives to long distance international (LDI) operators to establish the controversial international clearing house (ICH).

The proposed ICH gateway will converge all international calls to a single technical gateway led by Pakistan Telecommunication Company (PTCL) against the current practice of being handled by 14 LDI operators.

On the final trading session of the week, three of the top five volume leaders belonged to the telecom sector with PTCL leading the volumes, said an AKD research report.

The 1.5% cut in export refinance rates by the State Bank of Pakistan under the export finance scheme and the release of an official notification following the European Parliament’s approval of autonomous trade preferences (ATP) brought the textile sector in the limelight, according to KASB market monitor report. Nishat Mills was the top gainer amongst blue chips gaining 7.3% to close at Rs59.17.

The index heavyweight – oil and gas sector – played a crucial role in putting the market back on the recovery road. On Tuesday, the government cleared Rs80 billion worth of term finance certificates on behalf of the Oil and Gas Development Company (OGDC) to curtail the spiralling circular debt issue faced by the energy sector. OGDC and Pakistan State Oil – the major beneficiaries of this cash-neutral transaction – recorded a weekly gain of 4.8% and 1.2% to close at Rs182 and Rs260 respectively, according to JS Global Capital research report.

However, all news did not bring glad tidings: Moody’s Investor Service maintained its negative outlook on Pakistan’s banking system mainly due to higher private debt on the government. Consequently, the banking sector underperformed the market by 2%.

Outlook

While the finish line is in sight for the corporate results, certain blue chips such as Pakistan Oilfields, Attock Petroleum and Nishat Mills still have to release their scorecards, therefore bullish sentiments will stay. However, political tensions due to the resumption of the National Reconciliation Ordinance case against the prime minister scheduled for September 18th could put a damper on market gains. For banking stocks, it is vital to track how effectively the industry is able to put forward its demand for reduction in minimum deposit rates.

Winners

Pakistan International Airlines    

Pakistan International Airlines Corporation, the country’s national carrier, has been an air travel pioneer since its inception in 1955. Other activities of the company include provision of engineering and other allied services.

Pakistan Cables                  

The company’s principal activity is to manufacture and market telecommunication wires and cables. Pakistan Telephone Cables sells its products to consumers like Pakistan Telecommunications Company, Special Communication Organization and Pakistan Ordnance Factories.

KESC

Karachi Electric Supply Company is engaged in the generation, transmission and distribution
of electricity to industrial, commercial, agricultural and residential consumers. It
covers an area of 6,000 square kilometres.

Losers

Ghani Glass  

Ghani Glass Limited manufactures and sells glass containers and sheet glass of different types. The company offers its products in three categories: pharmaceuticals, food and beverage and float glass.

Shell Pakistan         

Shell Pakistan Limited markets petroleum products and compressed natural gas in Pakistan. The company also blends and markets various lubricating oils and other shell lubricants for cars, motorcycles, trucks, and heavy-duty vehicles.

PTCL 

The company provides telecommunication services in Pakistan. It owns and operates telecommunication facilities and provides domestic and international telephone services and other communication facilities throughout Pakistan.

Published in The Express Tribune, September 16^th, 2012.