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Weekly Karachi Stock Market Report (From 4th August 2014 to 8th August 2014)

It was a week of erosion in the stock market. This attrition resulted in the benchmark KSE-100 index falling by 933 points (3.1%) to close at 29,380 points. This detritions was caused by the country’s political situation took centre-stage and this political advancements seriously shook investor’s confidence.

KSEInvestors’ worst fears were realized after the government failed to make any agreement with Pakistan-Tehreek-e-Insaf (PTI) upon their demand of electoral reforms. This leaded PTI Chairman Imran Khan to decide for a planned long march (Azadi March) in Islamabad (capital) on August 14, in order to meet his demand.

Tensions were raised throughout the week as it appeared that the PML-N government was in panic mode and in sheer anxiety was taking some unmatched measures to prevent the march. Things were escalated when the leadership of PTI called off for any negotiations and called in for early elections to replace the government elected last year.

The development shook investor confidence and the index’s honeymoon above the 30,000-point barrier proved to be short-lived. It fell off abruptly by more than 850 points by the end of the day to 666 points on Monday. This was the worst closing since the December 2007 after former Prime Minister Benazir Bhutto was assassinated.

 

The index remained range-bound throughout the rest of the week as investors adopted caution and volumes plummeted. By the end of the week, the index had fallen by a further 267 points to close at 29,380 points on Thursday.

Index heavyweight sectors like oil and gas, banking and cements were worst hit and bore the brunt of the market’s decline. The oil and gas sector in particular was down 3.4% as a whole despite strong results from the Oil and Gas Development Company (OGDC) and the discovery of a gas field by Pakistan Petroleum Limited (PPL) in the Gambat block.

Similarly, the banking sector also posted strong results, primarily due to the shift in investments to higher yielding PIBs. However, despite the strong earnings performance by United Bank, Allied Bank and Meezan Bank, the sector was down 2.8% during the week.

 

  Top Gainers Top Losers Volume Leaders
Bata Pakistan Ltd [75,600,000] Rafhan Maize Products Ltd [92,364,000] Engro Fertilizers Limited [12,978,000,000]
Bhanero Textile Mills Ltd [30,000,000] Wyeth Pakistan Ltd [142,161,000] Lafarge Pakistan Cement Ltd [13,126,445,000]
Pakistan Services Ltd [325,242,000] Sanofi-Aventis Ltd [96,448,000] National Bank of Pakistan [21,275,128,000]
Ismail Industries Ltd [505,208,000] Exide Pakistan Ltd [77,686,000] Hub Power Co Ltd [11,571,544,000]
Hum Network Limited [700,000,000] Island Textile Mills Ltd [5,000,000] Fauji Cement Co Ltd [13,311,158,000]
Al-Abbas Sugar Mills Ltd [173,623,000] Service Industries Ltd [120,288,000] TRG Pakistan [3,853,907,000]
Atlas Battery Ltd [173,996,000] Khyber Tobacco Co Ltd [12,018,000] Faysal Bank Ltd [9,273,508,000]
Premium Textile Mills Ltd [61,630,000] Philip Morris (Pakistan) Limited [615,803,000] Pak Elektron Ltd [2,949,223,000]
Bannu Woollen Mills Ltd [95,062,000] Murree Brewery Co Ltd [230,530,000] Askari Bank Limited [12,602,601,000]
Javedan Corporation Limited [581,282,000] Mitchells Fruits Farms Ltd [63,000,000] Pakistan International Bulk Terminal Limited [7,586,145,000]

The cement sector also continued to reel from last week’s announcement of the sell-off of Lafarge Cement to Bestway Cement and fell 4.2%. In spite of the expectations of strong earnings from the sector, investors are unconvinced that the pricing agreement between the major players will hold. This was especially after Cherat Cement also announced plans to expand its production capacity during the week.

Foreign buying was the only positive peek of the week as foreigners shifted at the opportunity to buy shares at lower prices. They went on to purchasing a net of $22 million valuable equity during the week. This purchase was slightly lower than $25 million buying in the previous week.

KSE 2

Average daily volumes fell 25% and stood at 129.4 million shares per day while average daily values were down 29% at Rs. 6.38 billion trader per day. The KSE’s market capitalization stood at Rs. 6.90 trillion at the end of the week. It is expected that the stock market will not show any remarkable trend in the near future in the upcoming week due to the prevailing uncertainty. However the any contingent situation might come up with adverse effects in either ways. The political stability is currently seemed to be directly linked with the equity trends.

 

 

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About Emaad Qureshi