Weekly review: KSE-100 hits new high after breaching 33,000

Upcoming monetary policy announcement and earnings season fuelled market’s growth.

KARACHI:

The stock market witnessed a third consecutive week of huge gains as anticipation of a discount rate cut and strong earnings announcements pushed the benchmark KSE-100 index past the 33,000-point barrier to a record high during the week ended January 9.

The KSE-100 index rose 593 points (1.8%) during the week and settled at an all-time high of 33,324 at the end of trading on Friday. The index saw gains of 982 points and 738 points in the preceding two weeks and has climbed 1,193 (3.85%) since the start of 2015.

The market’s stellar performance in recent weeks is largely due to expectations of a discount rate cut in the monetary policy announcement due in the coming week. Analysts anticipate a rate cut of anywhere between 50 to 100 basis points and the market has witnessed frenzied activity since the low inflation figures for December 2014 were revealed.

Investors are also excited about the upcoming earning season with the banking and fertilizer sectors due to announce their full year earnings for 2014. The banking sector in particular is expected to post record earnings and has witnessed significant gains in the past few weeks.

A lot of activity was witnessed in the heavyweight oil and gas sector which rose 3.7% as a whole during the week despite declining global crude oil prices. With the majority of the sector having taken a massive hit in the past couple of months, investors are now eyeing significant returns from these companies and view them as trading at attractive valuations. The Oil and Gas Development Company, Pakistan Petroleum Limited and Pakistan Oilfields Limited all saw decent gains of 4.7%, 3.6% and 3.8% respectively during the week and stole the limelight at the bourse.

Other standout performers of the week were Nestle that rose 21.2% during the week and contributed 165 points to the KSE-100’s gains alone. Similarly, Dawood Hercules also saw significant gains and contributed 98 points to the KSE-100 during the week. Pakistan Telecommunication Company Limited also rose 9.5% during the week on anticipation of strong earnings.

Engro Corporation also rose 4% during the week as it emerged that the company had signed a deal with Guddu Thermal Power Station for the right to use 60mmcfd temporary gas for its fertiliser plant until December 2015. The deal is expected to provide a huge boost to the company’s bottom line as its issues with gas outages finally seem to come to an end.

Despite all the positivity, a cloud of uncertainty hung over the investors’ heads as foreigners continued to be net sellers and offloaded net equity worth $6.1 million during the week.

Average trading volumes shot up 27.3% during the week and stood at 295 million shares traded per day. While average daily values also rose 20.6% and stood at Rs15.5 billion daily. The Karachi Stock Exchange’s market capitalisation stood at Rs7.66 trillion ($74.9 billion) at the end of the week.

Winners of the week

Nestle Pakistan Limited



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

Dawood Hercules Corporation



Dawood Hercules Corporation Limited produces urea fertilisers. The company also produces anhydrous ammonia for manufacturers of soda ash, fructose, and other chemicals.

NIB Bank



NIB Bank Limited is a commercial bank operating in Pakistan.

Losers of the week

Pakistan Tobacco Company



Pakistan Tobacco Company Limited manufactures and sells cigarettes.

Colgate Palmolive



Colgate-Palmolive Pakistan Limited manufactures and sells detergents, personal hygiene, and a variety of other products.

Grays of Cambridge



Grays of Cambridge (Pakistan) Limited is a holding company. The company, through its subsidiaries, manufactures and exports sporting goods, specialising in hockey sticks.

Published in The Express Tribune, January 11^th, 2015.

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