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Monday, 26 November 2012

STOCK MARKET UPDATE: 27.11.2012



STOCK:
Karachi Stocks Up 25.98 Points:
KARACHI, Nov 26: At the close of trading, the KSE-100 index was at 16263.57, up 25.98 points.
(Today Market 64.64 Up @ 12.51 pm)

November 26, 2012
 5 TOP GAINERS  &  LOOSERS:

Bata (Pak)
Rs 71.00
Indus Motor Com
Rs (10.11)
Colgate Palmoli
Rs 50.00
Gillette Pak
Rs (5.70)
Island Textile
Rs 37.50
Exide (Pak)
Rs (4.91)
Sanofi-Aventis
Rs16.24
Al-Ghazi Tractor
Rs (3.47)
Bhanero Tex
Rs 13.08
Philip Morris
Rs (2.22)
Stocks add 32 points on selective buying
KARACHI, Nov 26: Stocks closed higher on Monday, but still below its all time high, as investors bought cement and textile shares on hopes of healthy payouts and increase in local and international demand, dealers said.
The KSE 100-share index ended 0.20 per cent, or 32.89 points higher at 16,270.48 points.
It made an intra-day high at 16,311.03 points, but still lower than its all time peak of 16,339.03 points made last week. Volume also rose to 260.2m shares, compared with 251.52m shares traded on Friday, as investors took fresh positions.
Trading value, however, decreased to Rs3.67bn from Rs3.71bn in the previous trading session and market capitalisation stood at Rs4.084 trillion, compared with Friday’s Rs4.071tr.
“Stocks closed higher amid increased activity lead by second tier stocks in cement, textile and banking sectors on strong valuations,” said Ahsan Mehanti of Arif Habib Ltd.
Dealers said investors accumulated shares from cement and textile sectors on relatively cheap valuations and on hopes of good returns.
Another trigger for the market could be a possible rate cut in the discount rate in the upcoming monetary policy which is due to be announced in December.
Most analysts are expecting a cut of at least 50 basis points.
But there are still some “concerns on gas supply, economic and financial front and political front, and caution is likely to persist in case of deterioration on mentioned issues in the local equity market,” said Hasnain Asghar Ali COO of Escorts Capital.
Foreign investors bought shares worth a net $962,243 on Monday, compared with $648,533 on Friday, bringing the total net buying for this month to $28.9m. But companies were the major sellers with equity worth $3.23m.
The market capitalisation based KSE 30-index also ended higher as it rose 0.20pc, or 26.18 points, to 13,197.47 points.
Out of the 386 companies traded, the value of 248 increased, 123 decreased, while 15 remained unchanged.
The biggest gainer for the day was Bata Pakistan which rose by Rs71 to Rs1,491 followed by Colgate Palmolive which ended higher by Rs50 at Rs1,300.
Among the declining scrips, Indus Motor Co gave up Rs10.11 to Rs261.31 and Gillette Pakistan was down by Rs5.7 to Rs108.3.
The volume leader among the ten-top briskly traded shares was Summit Bank which reported a huge turnover of 29.37m shares, though the price at the close showed a marginal rise of 2 paisa at Rs3.02. Fauji Cement ended 6 paisa higher at 7.03 on 17.25m shares and Maple Leaf Cement, another small investors’ delight, added 97 paisa to close at Rs16.44 on 17.18m shares.
Pervez Ahmed third-tier scrip also came up for trading yet again on Monday with a gain of 25 paisa to Rs3.98 on 12.02m shares, DG Khan Cement fell 7 paisa to Rs53.44 on 10.09m shares and Amtex Ltd gained 41 paisa to close at Rs3.5 on 8.25m shares.
Dewan Salman ended 16 paisa higher at Rs2.50 on 7.2m shares, Dewan Farooque rose 60 paisa to end at Rs4.09 on 5.93m shares and Pace Pakistan closed up 4 paisa at Rs3.24 on 5.85m shares.
Dewan Cement rose 22 paisa to Rs5.27 on turnover of 5.73m shares.

Textile sector stirs into life at KSE
KARACHI, Nov 26: Textile sector stocks have assumed prominence at the Karachi Stock Exchange where a wave of buying has propelled prices to highs not seen, perhaps in decades.
More than 30 stocks on the sector (composite, spinning, weaving) hit their ‘upper circuit’ in trading last Friday. The ‘upper/lower circuit’ is the maximum of Re1 or 5 per cent of the opening price of a stock, at which the rise or fall of scrip value a single day trading, is capped.
The mechanism allows ‘cooling’ effect lest an over-enthusiastic crowd of buyers or panicky investors spiral the price of a share up or down beyond reasonable limits. But the phenomenon of stocks hitting the ‘top’ is conspicuous by its presence in slow measure for most of the trading days since July.
“Now the bulls are all over the sector, tossing up prices of whichever stock they can lay their horns under,” says a trader.
Savvy investors, however, are looking at the company fundamentals before taking a leap.
As investors charge into the textile stocks head foremost, a back of he envelope calculation of turnover of shares in the sector looks like having crossed a record 2.5 billion since Jan this year. The scale of trading can be judged by the fact that it is higher than the turnover in same period, in the heavy-weight oil and gas sector; automobiles; electricity and insurance (life & non-life), combined.
Yet most analysts believe — as the fictional detective Sherlock Homes would say: “There is a method in this madness.”
Some of the strong positives that have rejuvenated stock prices in textile sector have been identified as: healthy core business; depreciation of (around 9 per cent) in the value of the rupee against major currencies; stable cotton prices; low inter-corporate debt scenario; approval of the agreement from European Union; and higher dividend income from subsidiaries.
The latest financial figures have triggered investors’ interest. The spinning sector revenue was recorded at Rs54.6 billion for the first quarter financial year 2013 (1QFY13), representing 5 per cent growth, from Rs52.2 billion in the corresponding period of the previous year.
Gross profit for the sector rose by a massive 124 per cent to Rs6.2 billion, from Rs2.8 billion during the quarter. Therefore, gross margin improved to 11.3 per cent in 1QFY13 from 5.3 per cent in the same period last year.
Analyst Abdul Azeem at brokerage InvestCap says: “The main reason for the jump in gross margins is the 10 per cent year-on-year (YoY) lower cotton prices during July-Sept 2012. Moreover, on local front better yarn prices provided a breather to the sector”.
On international front, demand of yarn from China, Hong Kong and Taiwan shot up as those countries turned to importing lower value inputs like yarn and grey cloth from Pakistan (and other yarn producing countries) to save on heavier labour costs and instead concentrate on production of finished garments.
Analyst noted that the textile exports were up by 5 per cent to $4.4 billion in July-Oct 2012 due mainly due to giant leap in export of yarn. The local spinning industry managed full capacity utilisation resulting in economies of scale.
At the operating level, the spinning segment’s operating profit recorded impressive growth of 239 per cent YoY to Rs4.5bn in 1QFY13. Financial charges of the sector shrank by 6 per cent YoY to Rs1.7bn in 1QFY13 as compared to Rs1.8bn in the same period last year.
In consequence, the bottom line of the spinning sector converted to a huge profit of Rs1.9bn in 1QFY13 from net loss of Rs1.4bn in the corresponding period last year.
Other textile segments, ready made garments, cotton clothes and towels also grew by 15 per cent YoY, 8 per cent YoY and 7 per cent YoY respectively.
Analyst Bilal Qamar commented: “During 1QFY13, the textile sector witnessed improved profitability on account of better sector dynamics, although power outages continued to restrict the growth. Consequently the textile sector has outperformed the stock market by 7 per cent (upto Nov 15), from July 1 this year”.

Outflow exceeds FDI in July-Nov
KARACHI, Nov 26: The repatriation of dividends and interest income outpaced the inflow of investments made by the foreigners in the first four months of this fiscal year putting further pressure on already dwindling foreign exchange reserves amid looming debt repayments to the IMF.
Latest data of the State Bank showed that the country received a total foreign direct investment of $244 million while foreigners repatriated $260 million during July-November period of 2012-13.
A senior currency dealer in the interbank market termed the situation grim as the rupee hit the record low against the US currency on Monday.
Atif Ahmed, the dealer said the rupee was falling fast against the major currencies reflecting the weak back up that may improve with rising forex reserves. However, he did not find any reason for improvement in the reserves.
The dollar was traded as high as Rs96.22 in the interbank market on Monday while in the open market the price of greenback surged to Rs97.15.
The State Bank reported that the repatriation of dollars was higher than the investment made in the country during the period under review.
Details showed the highest payment was made on financial business (banks) that rose to $89.7 million during the July-November period compared to just $24 million the same period last year.
It shows the banks and financial institutions including foreign banks have been earning well in the country while rest of the world is hostile to banking.
However, banks’ biggest client is the government which created enormous opportunity for banks to earn risk-free profits by investing into government papers.
The second highest payment was made by the petroleum refining sector which repatriated an amount equal to $76 million against $70 million paid during the same period of last year.
Power sector registered disinvestment, though it was much lower than last year. In the four months of previous year the disinvestment in the power sector (thermal) was $42 million while it was just minus $3.6 million this year. The repatriation of interest income and dividends fell sharply to $9.6 million against $53.7 million in the same period last year.
The largest disinvestments in telecommunication sector continued which badly hit the income on this sector. The sector witnessed a disinvestment of $102 million in the first four months while last year it recorded a disinvestment of $112 million.
This situation drastically reduced the repatriated money of interest and dividends. Last year repatriated amount was $35.7 million while it fell to just $5.4 million in the four months.
Company news:
Linde wins contract: FRANKFURT, Nov 26: German industrial gas giant Linde said on Monday it had won a contract to build a liquefied natural gas (LNG) plant in Malaysia.
Linde did not reveal the size of the contract from Malaysia’s national oil and gas company Petronas for what it described as a “mid-scale” plant but industry sources said it was worth an estimated 200-300 million euros ($259-389 million).—AFP

MOHAMMED SALEEM MANSOORI

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