Weekly review: KSE-100 consolidates gains after crossing 27,000

Start of earnings season led to stock-specific activity.


Bilal Umar January 25, 2014
Start of earnings season led to stock-specific activity.

KARACHI:


The stock market achieved a significant milestone this week after the benchmark KSE-100 index managed to cross the 27,000-point barrier to close at an all-time high of 27,002 at the close of trading on January 24.


The index, which has risen almost 7% since the start of 2014, managed to cross the barrier on the opening day of the week and closed at 27,105 points on Tuesday before entering a consolidation phase during which profit-taking was witnessed towards the end of the week.

On the whole, the KSE-100 index rose by 89 points (0.3%) during the week to continue its run of closing in the green since the start of 2014. Volumes also improved slightly as investors scooped up second and third-tier stocks.

The week also saw the start of the corporate earnings season, which resulted in stock-specific activity. Several blue-chip companies announced their results during the week including Pakistan Petroleum, the Attock Group companies and Engro Foods.

The results were largely in line with expectations, with the exception of Engro Foods which posted below expectations earnings of Rs1.14 per share, down 67% year-on-year. The company’s share surprisingly hit its upper circuit breaker in trading as investors believe the worst is over for the company.

Engro Fertilizers made a solid entry at the bourse, closing at its upper circuit breaker during all five trading sessions. The share price of the company rose 27.5% during the week to cap off a largely successful Initial Public Offering of the stock.

Engro Fertilizer’s parent company, Engro Corporation, also put in a strong performance and outperformed the market to close at Rs179.57. However, the company’s share price came under pressure towards the end of the week as it emerged that other urea manufacturers would resist the government’s decision to provide gas at concessionary rates to Engro.

The latest macro-economic data also revealed a current account surplus of $285 million for the month of December due to improved export performance. The textile sector was the star performer, posting a 20% year-on-year growth contributing $1.3 billion towards the export figures.

Foreigners were again net buyers during the week and bought a net of $24 million worth of equity at the bourse, up from $7.6 million in the preceding week.

However, the country’s foreign exchange reserves situation remained precarious as total reserves of the country dropped by $149 million to $8.17 billion, according to the latest figures revealed by the State Bank. The SBP’s own reserves also fell by $145 million to $3.32 billion, according to these figures.

Average trading volumes showed a slight improvement and stood at 310 million shares traded per day, up 4.8% week-on-week. Average daily value shot up by 22.8% and stood at Rs11.50 billion traded per day. The market capitalisation of the KSE stood at Rs6.62 trillion at the end of the week.

Winners of the week

Murree Brewery



Murree Brewery Company specialises in the manufacture of beer. The group also has juice extraction and food manufacturing divisions, located at Rawalpindi and Hattar respectively. Their glass division manufactures all the group’s bottles and jars.

Century Paper



Century Paper and Board Mills Limited manufactures and distributes different varieties of paper, paperboards and related products. The company also manufactures paper pulp, wood pulp and fibrous pulp. Century Paper also has a subsidiary that is engaged in the power generation business.

Nestle Pakistan Limited



Nestle Pakistan Limited manufactures, imports and sells dairy products, confectionaries, culinary products and fruit juices. The Group’s products include milk, butter, cream, noodles, coffees, dietary and infant products.

Losers of the week

Pace Pakistan Limited



Pace Pakistan Limited develops real estate in both residential and commercial sectors. The company develops and constructs
shopping malls, supermarkets and apartments.

Pakistan Tobacco Company



Pakistan Tobacco Company Limited manufactures and sells cigarettes.

National Foods Limited



National Foods Limited is a diversified food manufacturer. The group’s products include recipe blends, dehydrated vegetables, pickles, salts, snack foods, desserts and a several kinds of
health foods.

Published in The Express Tribune, January 26th, 2014.

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