Low inflation numbers and
sector-specific news provide
momentum to the market.
The KSE-100 index witnessed five consecutive sessions in the black and posted a gain of 3.3% (593 points) to close at the new record high. Positive macroeconomic data along with a flurry of sector-specific news acted as a catalyst for the gains.
Investors were provided a pleasant surprise early in the week as inflation numbers for the month of March were reported at 6.57%, down considerably from the nine-month average of 7.98% for the fiscal year 2012-13.
The surprisingly low inflation number quelled investors’ fears that the State Bank of Pakistan will resort to monetary tightening following rising inflation since the start of 2013. The central bank is due to announce its next monetary policy on April 12 and it is widely expected that the status-quo will be maintained by the bank.
Foreigners continued to purchase equity at the bourse and were again net buyers of $5.7 million worth of equity during the week, up from $2.2 million in the previous week.
However, the country’s foreign exchange reserves continue to slide following a payment of $106 million to the International Monetary Fund (IMF). Forex reserves dropped $168 million to $12.2 billion, according to the latest figures by the SBP.
There was a flurry of news flows for several sectors which resulted in activity in those sectors. The announcement of the delisting of Unilever Pakistan from the KSE for a price of Rs15,000 per share resulted in a rally in the fast-moving consumer goods (FMCG) sector with Engro Foods being the main beneficiary, gaining 13.8% during the week.
Cement sector sales also clocked in 3% higher on a year-on-year basis and hit a record monthly high of 3.33 million tons sold. The news resulted in an across-the-board rally for the sector.
There was also good news for the oil marketing sector as the government decided to increase marketing margins for motor spirit (MS) and high speed diesel (HSD), resulting in positive activity in the sector.
On the other hand, the Competition Commission of Pakistan imposed a hefty fine of Rs8.64 billion on Engro Corporation and Fauji Fertilizer Company for unjustified price hikes in urea during 2011. The news lead to an initial negative reaction, but the stock recovered later in the week as the companies have decided to appeal the decision.
Average daily volumes jumped 39% to 210 million shares traded per day. Average daily values skyrocketed 83% to Rs7.78 billion per day as a lot of activity centred upon blue-chips. Market capitalisation rose 3.2% to Rs4.58 trillion by the end of the week.
Winners
Unilever Pakistan
Unilever Pakistan manufactures and markets foods, beverages, detergents, and personal care products. The group’s products include tea, ice cream, cooking oils, margarine, specialised fats and oils, personal care products, and detergents.
National Foods
National Foods is a diversified food manufacturer. The group’s products include recipe blends, dehydrated vegetables, pickles, salts, snacks, desserts, and a number of kinds of health foods.
Bata (Pakistan)
Bata Pakistan Limited manufactures and sells rubber, leather, and microlon sandals and shoes.
Losers
Hum Network
Hum Network operates satellite television channels. The company operates a channel targeted primarily at women, one about food, and one that covers lifestyle and entertainment.
TPL Trakker
TPL Trakker is a vehicle tracking and fleet management service provider for markets in the Middle East and South Asian region. The company’s business is to supply GPS, GSM and satellite mobile asset tracking, management and information solutions.
Pak Reinsurance
Pakistan Reinsurance Company offers reinsurance and risk management services
in Pakistan.
Published in The Express Tribune, April 7th, 2013.
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