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Weekly review: KSE-100 closes flat despite volatility
[May 03, 2014]

Weekly review: KSE-100 closes flat despite volatility

(Express Tribune (Pakistan) Via Acquire Media NewsEdge) The stock market witnessed a second week of high volatility as a combination of unimpressive earnings results and lack of triggered activity resulted in the benchmark KSE-100 index ending the week almost flat with a gain of 71 points (0.2%) during the week ended May 2.

A midweek rally was cut short after the announcement of the crucial CPI figures for the month of April, which clocked in higher than expected and putting a dent in investor sentiment on the final trading session of the week.

With the budget for the next fiscal year set to be announced in the coming month, speculation also crept into the market resulting in a cautious approach by investors and some negative sentiment towards particular sectors.

The week started off on a negative note with two consecutive closings in the red, with the KSE-100 index falling 453 points as industry heavyweights Pakistan State Oil and Oil and Gas Development Company announced earnings below expectations. However, the bulls made a comeback on Wednesday as the banking and cement sector took centrestage.

The rally, however, was short-lived as the inflation figure of 9.2% was revealed on Friday resulting in the KSE-100 index closing flat that day, despite being 257 points in the black during trading hours. The high inflation numbers created pessimism about a discount rate cut in the upcoming monetary policy announcement by the State Bank in mid-May.

On the macro front, things continued to look rosy as the government successfully conducted the spectrum auction for next generation mobile services, generating $1.12 billion in the process. The successful bidders have pledged to deposit at least 75% of the due amount in the coming days.

During the week, the World Bank also approved $11 billion for Pakistan to be disbursed in the next five years, while the Asian Development Bank also approved $400 million for power sector reforms in the country.

Foreign buying remained strong as they remained net buyers in all four trading days and purchased $10.6 million worth of equity during the week. Foreign buying is expected to be the main trigger in the coming weeks.

In sector specific news, the Hub Power Company (the largest Independent Power Producer in the country) was the star performer as it rose 7.2% during the week as it announced earnings slightly above expectations.

The cement sector also remained a subject of interest as DG Khan Cement (the 2nd largest cement manufacturer) announced that it is considering acquiring Lafarge Pakistan Cement, putting to rest fears about a price war ensuing between cement manufacturers.

Average daily volumes continued to show a declining trend after dropping 4.7% to 199 million shares traded per day. Similarly, average daily values also declined 14.7 % and stood at Rs8.42 billion traded per day on average. The market capitalisation of the KSE stood at Rs6.93 trillion at the end of the week.

Winners of the week 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 number of kinds of health foods.

Pakistan Tobacco Company Pakistan Tobacco Company Limited manufactures and sells cigarettes.

EFU Life Assurance Limited EFU Life Assurance Limited provides a variety of insurance services. The company's services include loan protection plan, savings plan, executive pension plan and education plan.

Losers of the week Pakistan Reinsurance Company Pakistan Reinsurance Company offers reinsurance and risk management services in Pakistan.

Ghani Glass Limited Ghani Glass Limited manufactures and sells glass containers. The company manufactures international glass containers for pharma, food and beverage. Ghani Glass also manufactures float glass variations for commercial, domestic and industrial use.

NetSol Technologies Limited NetSol Technologies Limited provides information technology solutions and services. The company's services include custom software development, technology outsourcing, systems integration, application development, and business intelligence consulting.

Published in The Express Tribune, May 4th, 2014.

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