Sunday, 25 August 2013

Weekly Review

The benchmark KSE-I00 Index largely witnessed bearish activity this week, ending lower by 4.05%WoW to close Karachi Stock Exchange (KSE-100 Index) at 22,714.68 points with sentiments affected by anticipation of a reversal in the monetary policy cycle. Average daily volumes declined by 11.1%WoW to 196mn shares. Trading activity at Stock Exchange Market was led by FCCL, BOP, NBP, LPCL and MLCF. Key news flow in Karachi Stock Exchange during the week included 1) submission of a Letter of Intent by Pakistan to the IMF to formally request a US$6.6bn facility and 2) potential upward revision in gas prices by an average of PKR22/ mmbtu, effective retrospectively from Jul 1, 2013. The outgoing week was also characterized by a spate of corporate result which by and large failed to excite. Top gainers this week within the Karachi Stock Exchange Universe were EPCL (+7.5%), AKBL (+4.5%), ICI (+3.1%), HMB (+2.5%) and DAWH (+2.0%). On the flipside, declining scrips included HCAR (-9.2%), ENGRO (-9.5%), NML (-9.5%), EFOODS (-9.8%) and NBP (-11.7%), the latter losing out after a poor showing in 2QCY13.

Out Look:

While the corporate result season continues to drive interest (key results next week include LOTCHEM, PSO and KAPCO, among others), the announcement in Karachi Stock Exchange of the monetary policy by the SBP (scheduled for Tuesday, Aug 27’13) is the key upcoming checkpoint. In this regard, money market participants generally expect a hike in DR. Within this backdrop, we flag the banking sector as a key beneficiary where our preferred plays include UBL, BAFL and ABL.

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