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Wednesday, 10 August 2011

DAILY STOCK MARKET REPORT: 11th AUGUST,2011


Stock

Karachi Stocks Up 276.37 Points:
KARACHI, Aug 10: At close of trading, the KSE-100 index was at 11311.29, up 276.37 points.
August 10, 2011

5 TOP SCRIPTS GAINERS AND LOOSERS
Uni Lever Foods Rs 66.44 Hino Pak Motor Rs (4.93)
Nestle Pakistan Rs 66.12 Indus Motor Co Rs (2.45)
Siemens Pak Rs 41.17 Shezan International Rs (2.14)
Colgate Palmol. Rs 35.11 Ibrahim Fibres Rs (1.46)
Attock Petroleum Rs 16.05 Packages Limited Rs(1.29)

KSE 30 – Shares Index Previous :10,407.25,Wednesday’s 10,704.27,plus 297.02 points.
KSE 100 – Shares Index Previous: 11,034.92,Wednesday’s 11,311.29, plus 276.37 points
MARKET CAPITALIZATION : Previous Rs.2,922.222bn,Wednesday’s 3,012.427bn, plus 90.205bn.
VOLUME LEADERS :Soneri Bank, 6.351m, Azgard Nine 5.090m, National Bank 4.376m,                      Lotte Pakistan   3.976m, J.S.& Co 3.207m shares.
TOTAL VOLUME:67.652m shares
TOTAL TONE: firm, total listed 637, actives 335, inactives 302, plus 200, minus 50, uncchanged 85

KSE Joins World Market Turmoil
KARACHI, Aug 9: After experiencing a wobble the previous day, the Karachi stock market tumbled three per cent or 369 points on Tuesday to join the rest of world’s financial markets which have been watching the worst sell-off since the 2008-09 global financial crisis.
The KSE-100 index closed at a nine-month low, or just above the 11,000 points level, as the figures released by the National
Clearing Company of Pakistan hinted that the much-feared panic selling by foreign investors was turning into a reality.
Offshore investors pulled out a huge portfolio investment of $7.6 million on Tuesday.
The credit rating agency Standard and Poor’s had stirred a hornet’s nest on Friday by downgrading the US debt to AA plus from top notch triple A. The resulting crisis of confidence in the world’s richest economy has since seen investors all over the globe selling equity and seeking refuge in safe havens like Swiss franc and gold.
Sayam Ali, the country economist at Standard Chartered Bank in Karachi, explained that the downgrade by S&P had raised concerns of a strong likelihood of US economy remaining weak, housing market on the decline, mortgage defaults and no significant turnaround in the banking sector.
The World Bank’s lending arm, IMF, had many hats held out to it but no more coins to toss. He said that US policymakers who had acted in an indecisive manner would have to stabilise the market, failing which double dip depression would stare the global economy in the face. A surprise 29-point gain in Pakistan’s equity values on Monday despite two to five per cent crash in markets across the US, Europe and Asia was thought to be the result of buying by institutional players.
Manzoor Ahmed, chief operating officer at the country’ largest mutual fund which manages Rs80 billion, said all three equity funds of NIT were on the buying side. “We are not going for aggressive buying, but look at fundamentally sound value stock with long-term perspective,” he said.
He said that in spite of the falling market, there was no run on redemptions and the mutual fund, on the contrary, saw net unit buying on Tuesday.
The S&P warned on Monday that in the event that US and European economies were to contract or stagnate, export dependent economies with large exposures to the US and Europe would feel the most pronounced economic impact. The agency placed Pakistan at the top of seven countries it marked as vulnerable to offshore capital markets. The S&P said it drew the conclusion from the experience of global financial crisis of 2008-09. But almost all economists and stock strategists in Karachi were of the opinion that economic fundamentals of Pakistan were radically different now, from the unsound financial health during the last big depression.
“In 2008, adding to the international crisis was the external account adversity in the local economy,” said Farhan Mahmood, research analyst at Topline Securities. He recalled that the country’s external deficit on account of adverse price shock had ballooned to $13.9 billion (8.7 per cent of GDP) during the financial year 2008, forcing the rupee to a sharp depreciation of 21 per cent against the dollar.
This time around, he said, the country had a comfortable cushion of external account balance; interest rates were positive; subsidies largely contained and the KSE-100 index offered Return on Equity of 22 per cent — the highest in the region. “All of which is a source of comfort and should calm investors’ fears in the local market.”
So would a potential foreigners’ exit necessarily spark panic sell-off by local investors? Manzoor Ahmed of the NIT thought that even if the index were to go into tailspin, it would not naturally mean an imminent crash of the market. “Much of the overseas investors’ money is placed in a handful of stocks,” he said, adding that was why if some heavyweight stocks were to sink, it would not impact the wider market.
This was not to say that the fundamentals of blue chip oil and gas stocks would not be battered by the heavy plunge in prices of crude to $76 a barrel from $110.
Many analysts were already re-rating earnings forecasts for oil exploration and production companies. Economist Sayam Ali said Pakistan could not remain immune from potential global recession. He said that 50 per cent of the country’s exports were destined for the United States and Europe; the country had last received $3 billion remittances from those countries.
“Though the decline in oil price was good news for now, a hit on the Middle East economies would push them into weaker territory with a negative impact on large remittances — $5 billion — sent in by workers in the region,” Mr Ali said.
Several stock strategists thought that given the estimated $2.6 billion held in Pakistani equities by foreign investors, which amounted to 30 per cent of the free float, the sell-off on Tuesday was insignificant. Interestingly, not many in the market really seemed to understand implications of the US credit downgrade, but everyone watching the clobbering of global financial markets wanted to dump stocks. A broker put it: “It’s a classic case of sell first, ask questions later.”
Stock Market recovery of 276 points
KARACHI, Aug 10: The share market on Wednesday was back on the rails boosted by strong foreign and local buying in the leading oil shares and other blue chips at the current lows but the volume figure did not match the pace of covering purchases.
The KSE 100-share index recovered 276.37 or 2.50 per cent of the overnight losses but still far away from the total combined loss of 7.22 per cent suffered in Friday’s and Tuesday’s plunges.
All the leading oil shares, notably PSO, Attock Petroleum, National Refinery, Shell Pakistan, Engro Corporation, Fauji Fertiliser, Millat Tractors and Al-Ghazi Tractors virtually raced toward their pre-reaction level on strong covering purchases amid reports of higher interim earnings.
“Of late the KSE seems to be behaving in unison with the global equity and commodity markets, a new phenomenon in the local stock trading history,” said analyst Ahsan Mehanti. “Whether it is a genuine reaction or imported one is still an unsettled issue.”
Never before in the trading history of the KSE, it had reacted so violently to the global crises as it has been doing for the last couple of weeks, although nothing has changed in most of basic facts, he said.
“I don’t call it a price manipulation by the big ones to scare the small investors leading to panic-selling but the entire episode needs deep study,” analyst Samar Iqbal said and added that it was not a joke to witness the erosion of Rs100 billion from the
investor capital just in one-go.
However, the general investor may not cherish the idea of violent price movements on alternate days and would like the return of normalcy in stock trading, he said.
Among the gainers, Unilever Foods and Nestle Pakistan were leading, up Rs66.44 and Rs66.12, while losers were led by HinoPak Motors and Indus Motors.
Traded volume fell to 67.652m shares from the previous 69m shares but gainers held a strong lead over the losers at 200 to 60, with 85 shares holding onto the last levels.
The active list was topped by Soneri Bank, easy eight paisa at Rs4 on 6m shares followed by Azgard Nine, steady by 52 paisa at Rs4.90 on 5m shares, National Bank, up Rs1.53 on 4m shares, Lotte Pakistan, up 72 paisa at Rs10.73 also on 4m shares, JS & Co, up 57 paisa at Rs5.96 on 3m shares, Fatima Fertiliser, firm by 54 paisa at Rs15.50 also on 3m shares and Fauji Fertiliser, higher by Rs3.13 at Rs155 on 2m shares.
Engro Corporation, whose board meeting is due next week to have an overview of the interim working results, higher by Rs6.38 at Rs129.57 on 2m shares, Kot Addu Power, up Rs1.37 at Rs40.99 also on 2m shares and PTCL, easy by 14 paisa at Rs11.42 also on 2m shares.
FUTURE CONTRACTS: National Bank led the list of actives on this counter, higher by Rs1.42 at Rs45.85 on 0.814m shares, Pakistan Oilfields, higher by Rs9 at Rs339.90 on 0.927m shares and Engro Corporation, up Rs6.11 at Rs130.17 on 0.487m shares.
They were followed by D.G. Khan Cement, firm by 79 paisa at Rs20.94 on 0.424m shares and Nishat Mills, up Rs1.86 at Rs40.28 on 0.333m shares.
DEFAULTER COMPANIES: Japan Power again led the list of actives on this counter, higher by nine paisa at Rs1.09 on 42,234 shares followed by Ravi Textiles, steady by one paisa at Rs0.83 on 10,572 shares and Dewan Auto, up two paisa at Rs1.02 on 2,802 shares. Others were fractionally traded.

Mohammed Saleem Mansoori

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