Investors chose to book profits ahead of discount rate hike.
The stock market’s impressive rally came to an end this week as investors chose to book profits ahead of the Ashura holidays.
The benchmark KSE-100 index fell marginally by 80 points (0.3%) during the shortened trading week which ended on November 13.
Despite a positive start to the week, the market could not sustain its upward momentum after the State Bank of Pakistan announced that it would reveal the monetary policy for the next two months a bit ahead of schedule, resulting in profit-taking by market participants.
The market opened the week on a strong note after the International Monetary Fund announced that it was satisfied with Pakistan’s performance in its review of the economy, enabling the release of $550 million under the Extended Fund Facility.
A lot of activity was also witnessed in the banking sector as investors anticipated a 100-basis-point hike in the discount rate. However, the index closed with only a small gain as investors resorted to profit-taking towards the end of the day.
The news of the central bank unveiling the monetary policy ahead of schedule along with the upcoming Ashura holidays triggered profit-booking for the remaining two days. However, this had a little effect as sector-specific news attracted investment in certain stocks.
The banking sector experienced a strong week as an increase in the discount rate was widely anticipated. Many analysts agreed that the State Bank would raise the benchmark rate by 100 basis points which kept shares of National Bank of Pakistan, Habib Bank and United Bank in the limelight.
On Wednesday, the State Bank did announce the discount rate hike, but only by 50 basis points, which is likely to put pressure on banking stocks in the coming week.
Engro Corporation took centre stage again as it emerged that the Economic Coordination Committee would likely agree on preferential pricing for Engro’s Enven fertiliser plant under its agreement with Sui Northern Gas Pipelines Limited. The company’s stock hit its upper circuit-breaker within five minutes on the last trading session of the week.
Macro-economic data also helped cushion the market as it was revealed that $5.3 billion worth of remittances had been sent by Pakistanis working abroad in the first four months of the current fiscal year, representing a growth of 6.3% year-on-year.
Foreign investment in the stock market continued to flow in as foreigners bought a net $11.3 million worth of equity. The number, however, was largely inflated by an off-market transaction of $8.5 million in Siemens Pakistan Limited.
Average trading volumes were up by 27% and stood at 160.7 million shares per day. Average daily value also climbed 11.7% and stood at Rs6.4 billion. The market capitalisation stood at Rs5.51 trillion at the end of the week.
Winners
Shifa International Hospitals
Shifa International Hospitals Limited establishes and runs medical centres and hospitals in Pakistan. The company’s clinical services include medicaine, pediatrics, surgical, obstetric and gynecology, dentistry, rehabilitation services and ophthalmology.
Adamjee Insurance
Adamjee Insurance Company Ltd underwrites insurance. The company offers fire, marine,
automobile, engineering, and miscellaneous coverages. The engineering coverage includes contractor’s all risk, plant and machinery, etc and performance bonds.
Askari Bank
Askari Commercial Bank Limited provides commercial banking services, and has branches
in Pakistan, Azad Jammu, Kashmir and Bahrain.
Losers
Azgard Nine
Azgard Nine manufactures and exports textile products such as denim fabrics, and apparel. The company also manufactures and sells urea and phosphatic fertilisers from its fertiliser plants.
The Hub Power Company
The Hub Power Company Limited owns, operates and maintains an oil-fired power station in Pakistan. The company delivers electricity for distribution to industrial, commerce, agriculture, and domestic customers. Hub’s clients include the Water and Power Development Authority.
Thal Limited manufactures
Thal Limited manufactures jute goods. The company also undertakes engineering projects.
Published in The Express Tribune, November 17th, 2013.
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