Weekly review: Market breaks bearish spell as earnings season kicks in
Significant foreign investment leads to an increase of 3.9% in index.
Significant foreign investment leads to an increase of 3.9% in index.
KARACHI:
The stock market broke free from the stranglehold of bears and managed to put in a stellar performance as the benchmark KSE 100-share index posted a gain of 846 points (3.9%) during the week ended October 25.
The market’s recovery was fuelled by a mix of corporate earnings’ announcements and the return of foreign buyers. Investors breathed a sigh of relief on the comeback as the market had slid in the run-up to Eid holidays with activity also taking a plunge.
The week saw the start of corporate earnings season for the quarter ended September 30 for several industry heavyweights, which resulted in heavy stock-specific activity. Although the earnings were a mixed bag, they provided the catalyst for the market’s recovery and attracting the attention of foreign investors.
Leading the way was the bourse’s most heavily weighted stock, the Oil and Gas Development Company (OGDC). The company announced above-expectation earnings of Rs7.81 per share for the quarter along with a 20% payout. The result sparked buying activity in the stock, resulting in the share outperforming the market by 6% during the week.
Among banks, United Bank Limited, Habib Bank Limited and MCB Bank posted strong results, sparking activity in these stocks. However, National Bank of Pakistan (NBP) reported a sharp decline in earnings, triggering selling in its stock.
The stock market’s poster child from last year, Engro Foods, also fared badly after announcing a 79% year-on-year decline in earnings for the quarter. The result took the entire market by surprise and led to many investors offloading the stock.
Foreigners made a strong comeback to the bourse and may very well be the torchbearers in coming weeks for the country’s stock markets. Foreign buying stood at a solid $29 million for the week and provided a strong boost to the market.
Foreign activity will be watched closely in coming weeks as it is likely to set the tone for the bourse.
The market’s gains came despite deteriorating macroeconomic condition of the country. Current account stood in deficit at $1.2 billion for the first quarter of fiscal year 2013-14. Similarly, foreign exchange reserves continued to slide and stood at only $9.2 billion on October 14.
Investors were encouraged by the announcement from the United States that it would shortly resume assistance to Pakistan with a package of $1.6 billion under the Coalition Support Fund. The aid had been halted last year as relations between the two countries turned sour.
Average trading volumes showed signs of normality and rose 115% over the previous week’s abysmal levels. They stood at 133 million shares per day. Average daily value also shot up 156% and stood at Rs5.24 billion. Market capitalisation stood at Rs5.33 trillion at the end of the week.
Winners of the week
Netsol Technologies
NetSol Technologies Ltd provides information technology solutions and services. The company’s services include custom software development, technology outsourcing, systems integration, application development, and business intelligence consulting.
Fauji Cement
Fauji Cement Company Limited manufactures and sells cement.
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.
Losers of the week
Engro Foods
Engro Foods produces a wide range of dairy products. The company’s products include ice cream, flavoured milk, fruit juices and milk powders.
Kohat Cement
Kohat Cement Company Limited manufactures and sells grey cement.
International Steels
International Steels Limited manufactures steel. The company produces cold rolled, sheet, and hot dipped galvanized sheet steels. International Steels serves the construction, appliances, automotive, agricultural implements, and packaging industries.
Published in The Express Tribune, October 27th, 2013.
The stock market broke free from the stranglehold of bears and managed to put in a stellar performance as the benchmark KSE 100-share index posted a gain of 846 points (3.9%) during the week ended October 25.
The market’s recovery was fuelled by a mix of corporate earnings’ announcements and the return of foreign buyers. Investors breathed a sigh of relief on the comeback as the market had slid in the run-up to Eid holidays with activity also taking a plunge.
The week saw the start of corporate earnings season for the quarter ended September 30 for several industry heavyweights, which resulted in heavy stock-specific activity. Although the earnings were a mixed bag, they provided the catalyst for the market’s recovery and attracting the attention of foreign investors.
Leading the way was the bourse’s most heavily weighted stock, the Oil and Gas Development Company (OGDC). The company announced above-expectation earnings of Rs7.81 per share for the quarter along with a 20% payout. The result sparked buying activity in the stock, resulting in the share outperforming the market by 6% during the week.
Among banks, United Bank Limited, Habib Bank Limited and MCB Bank posted strong results, sparking activity in these stocks. However, National Bank of Pakistan (NBP) reported a sharp decline in earnings, triggering selling in its stock.
The stock market’s poster child from last year, Engro Foods, also fared badly after announcing a 79% year-on-year decline in earnings for the quarter. The result took the entire market by surprise and led to many investors offloading the stock.
Foreigners made a strong comeback to the bourse and may very well be the torchbearers in coming weeks for the country’s stock markets. Foreign buying stood at a solid $29 million for the week and provided a strong boost to the market.
Foreign activity will be watched closely in coming weeks as it is likely to set the tone for the bourse.
The market’s gains came despite deteriorating macroeconomic condition of the country. Current account stood in deficit at $1.2 billion for the first quarter of fiscal year 2013-14. Similarly, foreign exchange reserves continued to slide and stood at only $9.2 billion on October 14.
Investors were encouraged by the announcement from the United States that it would shortly resume assistance to Pakistan with a package of $1.6 billion under the Coalition Support Fund. The aid had been halted last year as relations between the two countries turned sour.
Average trading volumes showed signs of normality and rose 115% over the previous week’s abysmal levels. They stood at 133 million shares per day. Average daily value also shot up 156% and stood at Rs5.24 billion. Market capitalisation stood at Rs5.33 trillion at the end of the week.
Winners of the week
Netsol Technologies
NetSol Technologies Ltd provides information technology solutions and services. The company’s services include custom software development, technology outsourcing, systems integration, application development, and business intelligence consulting.
Fauji Cement
Fauji Cement Company Limited manufactures and sells cement.
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.
Losers of the week
Engro Foods
Engro Foods produces a wide range of dairy products. The company’s products include ice cream, flavoured milk, fruit juices and milk powders.
Kohat Cement
Kohat Cement Company Limited manufactures and sells grey cement.
International Steels
International Steels Limited manufactures steel. The company produces cold rolled, sheet, and hot dipped galvanized sheet steels. International Steels serves the construction, appliances, automotive, agricultural implements, and packaging industries.
Published in The Express Tribune, October 27th, 2013.