Weekly Review: Buying spree propels Karachi bourse over the 18,000 mark

With positive developments for particular sectors, corporate results continues to play their role.

KARACHI: A buying spree propelled the Karachi bourse over the psychological 18,000-mark during the week, as political turmoil and an uncertain law and order situation could only offer limited resistance to the bullish charge.

The benchmark KSE-100 index managed to gain 277 points, up 1.6% week-on-week, where average volumes improved 14% to 309 million shares and foreign inflows clocked in at $11.6 million during the week.

Corporate results played their role in keeping the mood upbeat as blue-chip companies announced their earnings for the July to December 2012 period, where most announcements were below market’s overestimated expectations. Nishat Mills surprised on the upside with a second quarter earnings per share (EPS) of Rs5.10, up 106%, while Kot Addu Power Company’s interim payout of Rs3 per share was a disappointment, falling short of market consensus.

Key developments fuelling the bull run during the week included a gas sales agreement signed between fertiliser producers and the Oil and Gas Development Company for interrupted supply of 130 million cubic feet (mmcf) of gas per day at $2.6 per million British thermal unit (mmbtu) from the Kunar Pasakhi Deep gas field. The deal was a positive breakthrough for the Sui Northern Gas Pipelines-based fertiliser plants as Engro Corporation outperformed the market by 13.2% in the week.

The SNGPL network includes Pakarab Fertilizer, Engro Enven, Agritech Limited and Dawood Hercules fertiliser plants.

A favourite with investors, the telecom sector continued its rally on the back of the news that the Lahore High Court’s interim decision of suspending the international clearing house (ICH) was overruled by the Supreme Court. The Supreme Court highlighted that it was not in the high court’s domain to suspend the ICH. However, the apex court asked the Competition Commission of Pakistan to give a decision on the ICH in the next 15 days. The higher international call rates under the arrangement aided the telecom sector in posting exponential growth in earnings.

Pakistan Telecommunication Company outperformed the market by 7.6%, Telecard by 27.8%, WorldCall Telecom by 6.6% and Wateen Telecom by 5.7% during the week.

As per reports, the Ministry of Petroleum and Natural Resources had accepted a proposal of the oil marketing companies to increase marketing margins on motor spirit and high-speed diesel by Rs0.25 per litre and Rs0.1 per litre respectively. The proposal will be sent to the Economic Coordination Committee for approval, and if approved could spur buying in the related sectors.

Market capitalisation grew 0.6% to $45.8 billion during the week.

What the future holds

Banking sector is due to announce earnings next week, where the National Bank of Pakistan and United Bank are expected to take the lead. However, with the market straying into the uncharted territory, volatility may spike further.

With little over three weeks to go till the expiration of the incumbent government’s tenure, development s over the caretaker setup and timing of the polls will gain traction and political force may guide the market.

Winners

Murree Brewery



Murree Brewery Company specialises in the manufacture of beer and Pakistan Made Foreign Liquor. The group also has juice extraction and food manufacturing divisions, located at Rawalpindi and Hattar.

Engro Corporation



Engro Corporation produces fertilisers, polyvinyl chloride resin, and industrial automation products, develops electricity generating plants, produces dairy foods, and operates a liquefied petroleum gas and liquid chemical terminal.

Packages Limited



Packages Limited manufactures and sells paper, tissue products, paperboard and packaging materials.

Losers

Sui Northern Gas Pipelines



Sui Northern Gas Pipelines purchases, purifies, transmits, distributes, and supplies natural gas, in addition to marketing liquefied petroleum gas.

Agriauto Industries



Agriauto Industries manufactures auto, tractor and motorcycle parts. The group’s products include gaskets, valves and sleeves, shock absorbers, camshafts, brake bands, hydraulic lift covers, steering boxes and transmission components.

Pakistan Tobacco Company



Pakistan Tobacco Company Limited manufactures and sells cigarettes.

Published in The Express Tribune, February 24^th, 2013.

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