DAILY STOCK MARKET UPDATE: 21.09.2011

Stock

Karachi Stocks Up 166.23 Points:
KARACHI, Sept 20: At close of trading, the KSE-100 index was at 11522.87, up 166.23 points.

September 20, 2011

TOP  5  SCRIPTS GAINERS AND LOOSERS:

Siemens Pak	Rs 40.67	Rafhan Maize	Rs (94.93)
Indus Dyeing	Rs 14.74	Nestle PakistanCo	Rs (11.51)
National Refinery	Rs 8.36	Nadeem Textiles	Rs (3.78)
Millat Tractors	Rs 8.12	National Foods	Rs (3.33)
Pak Oilfields	Rs 7.42	New Jubilee Ins	Rs (2.50)

KSE 30 – Shares Index	Previous 10,933.67, Tuesday’s 11,055.55, plus 121.88 points
KSE 100 – Shares Index	Previous11,356.64, Tuesday’s 11,522.88, plus 166.24 points
MARKET CAPITALIZATION	Previous Rs3,015.198bn, Tuesday’s Rs3,044.337bn, plus Rs29.139bn
VOLUME LEADERS	Bank of Punjab 5.364m, National Bank 4.398m, Lotte Pakistan 3.206m, Fauji Fertiliser Bin Qasim, 2.422m, J.S. & Co 2.302m shares.
TOTAL VOLUME	49.260m shares
TOTAL	TONE: Firm, total listed 637, actives 326, plus 159, minus 87, unchanged 311

Stocks gain 166 points at 11,523

KARACHI, Sept 20: The stock market on Tuesday maintained a bullish outlook as leading shares came in for active short-covering at lower levels and ended higher under the lead of oil and fertiliser shares.
Analysts said both institutional and some foreign investors gave the much-needed lead to local market players, an attractive bait being the current lower levels on the blue chip counters. But some others said the market behaved in unison with foreign markets, leading to a smart rally.
The market’s buoyant mood was also well reflected in the benchmark, which rose by 1.46 per cent or 166.24 points at 11,522.88, reflecting the strength of leading base shares, notably Pakistan Oilfields, National Bank, Nishat Mills, Fauji Fertiliser Bin Qasim and Engro Corporation.
But credit for the hefty rise goes to index-heavy OGDC, up by Rs5.84 at 131.37 and analysts said each rise of one rupee in it adds 16 points to the index which means about 96 points to the total were contributed by it.
Active buying in most of the blue chips at the prevailing levels indicates that the benchmark is steadily rising to its next target of 12,000 point level despite the fact the news from the foreign aid front were not that encouraging and the economy may be in a bad shape, some floor brokers said.
The perception that the corporate earning reports both final and interim by some of the leading listed sectors for the quarter ending Sept 30, 2011, may be on the higher side appears to be the chief factor behind the robust rise in the benchmark, some analysts said.
But some others said the revival of selective foreign and local fund demand played a dominant role in the market stability well above the current lows.
Prominent gainers included Siemens Pakistan and Indus Dyeing, higher by Rs40.67 and 14.74 while losers were led by Rafhan Maize and Nestle Pakistan, off Rs94.93 and Rs11.51, respectively.
Traded volume showed a modest rise at 49.260m shares from the previous 31m shares but gainers held a strong lead over the losers at 159 to 87,with 80 shares holding on to the last levels.
The active list was topped by Bank of Punjab, up 31 paisa at Rs6.33 on 5m shares followed by National Bank, higher by 72 paisa at 44.93 on 4m shares, Lotte Pakistan, unchanged at 12.60 on 3m shares, Fauji Fertiliser Bin Qasim, steady by 36 paisa at 54.06 also on 3m shares, JS & Co, lower by 17 paisa at 5.67 on 2m shares, Nishat Mills, higher by 1.01 at 48.01 also on 2m
shares and Pakistan Oilfields, sharply higher by Rs7.42 at 372.92 on 1.346m shares.
Other actives included DG Khan Cement, higher by 45 paisa at 20.52 on 1.340m shares, Attock Refinery, higher by Rs1.47 at 110.42 on 1.195m shares and Nishat Power, up 36 paisa at 14.56 on 1.081m shares.
FUTURE CONTRACTS: National Bank came in for renewed support and was quoted higher by 80 paisa at Rs45.13 on 0.786m shares followed by Fauji Fertiliser Bin Qasim, firm by 28 paisa at 54.24 on 0.563m shares and Lotte Pakistan, easy eight paisa at 12.62 on 0.485m shares.
They were followed by Engro Corporation, higher by Rs2.02 at 134.53 on 0.438m shares and Nishat Mills, sharply higher by Rs1.01 at 48.21 on 0.435m shares.
DEFAULTER COs: Climax Engineering led the list of actives, up 99 paisa at Rs4 on 40,000 shares followed by Japan Power, easy by one paisa at 1.01 on 40,354 shares and Invest Bank lower by six paisa at 0.26 on 20,010 shares.
Morafco Industries also came in for active support and was marked up by 95 paisa at 10.25 on 30,000 shares, followed by Abdullah Shah Sugar, higher by 56 paisa at 3.56 on 2,600 shares.

Low inflation numbers excite investors

KARACHI, Sept 20: The Karachi stock market took another sleepy start on Tuesday and appeared to drag through another day of low volumes and a flat index level.
Yet, at mid-day, the index took a sharp turn north after the inflation numbers at 11.56 per cent were declared.
“This came low by a surprisingly wide margin over the market consensus of 13.20 per cent,” said an analyst.
He thought that the low numbers (possibly arrived due to change in CPI calculation methodology) had paved way for a generous discount rate cut by the SBP in the Monetary Policy Statement to be read out at the end of next month. Optimists were looking at rate cut up to 200bps.
But that aside, analysts and economists were also commenting on the pros and cons of Pakistan’s decision to break away from the International Monetary Fund (IMF) programme.
Muzzammil Aslam and Furqan Ayub at brokerage firm JS Global produced a joint report: “Dumping IMF: challenges and repercussions.”
Following Pakistan’s decision not to seek an extension of the current IMF programme due to end on Sept 30 or to ask for a new one, it would make the eight unsuccessful programmes out of the nine that the country has had with the International lending agency.
The IMF annual meeting, a routine affair, is to be held on Sept 23 to 25.
The decision to end IMF programme had raised several questions, which included: To see if the country’s economy was stable; if the IMF conditions were too tough and third how dependent was Pakistan’s economy on the IMF?
The JS Global economists’ noted that at the moment Pakistan was in a marginally comfortable situation on the external front.
Export growth led by a favourable commodity cycle (30%YoY rise in cotton prices in FY11) coupled with robust remittances had enabled the country build healthy foreign exchange reserves ($17.8bn) and kept current account deficit ($189m in 2MFY12) under manageable proportions. However, inefficiencies related to public finances continued to dent the overall economic structure.
Regarding the toughness of IMF conditions, the economists say that under the current circumstances (a question mark on government popularity and elections approaching) it would have been extremely taxing to meet IMF conditions. Already government has taken tough decisions (removal of oil subsidy, inland revenue, transferring oil payments to the private sector), in order to meet the IMF conditions, leaving little room to maneuver a balance between stern economic management and popular administrative measures.
But is the country overwhelmingly dependent on IMF? The economists noted that Pakistan’s dependence on IMF was on two counts, which could be separated into Indirect and Direct. The indirect dependence related to endorsement of the IMF being crucial. It was noted during the global recession in 2008 that multilateral institutions were reluctant to assist Pakistan without IMF’s approval. Similarly bilateral loans would also be less accessible to Pakistan if the country was out of the IMF programme. This was validated as Pakistan serviced debt of $7.8billion in FY11 with the assistance of multilateral institutions and Paris Club after IMF’s tranche was delayed.
In regard to direct impact, it was noted that the circumstances were more challenging in FY12 with repayments scheduled to start from February 2012 especially since raising funds (irrespective of Pakistan’s economic fundamentals) through exchangeable bonds and euro bonds given the current turmoil in global markets, looked unlikely.
With healthy foreign exchange reserves and a manageable Current Account Deficit, Pakistan should be able to pay off its 2012 repayments, however increasing volatility in foreign exchange reserves and rupee along with a rise in dollarization were key risks going forward.
Pakistan had so far received $7.48bn dollars under the IMF programme with the last tranche of $1.13bn received in May 2010 (foreign exchange reserves at the time were at $15.05bn). Despite not receiving any inflows from the IMF in FY11 (except $451m under the Emergency Natural Disaster Assistance (ENDA) Pakistan’s foreign exchange reserves had increased to $18.2bn in FY11, noted the economists.

Mohammed Saleem Mansoori