STOCK MARKET UPDATE: 08.05.2013

STOCKS

Karachi Stocks Up 6.04 Points:
KARACHI, May 07: At the close of trading, the KSE-100 index was at 19262.74, up 6.04 points.

(Today 8^th April- Market is 152.25 Up@ 10.37 am)

Equities manage modest gains

KARACHI, May 7: The stock market closed flat with a token gain of 6.04 points to settle at 19,262.74 points. The market seemed to be making efforts to close positive, though several indicators suggested that investor attitude was fast changing to ‘wait and watch’ in the face of frenzied campaigns for the elections, which are only four days away.
The contribution of 50 points by the two heaviest weighted stocks in the index, OGDC and MCB Bank, supported the index from tumbling into the red.
Unlike Monday, the stocks could climb only 36 points above the earlier day’s close to the high at 19,298 points but dipped by 94 points to intra-day low at 19,169.13 points.
The fact that some big ticket heavy-weighted index shares were major contributors was also seen in the steep decline in trading value of shares by Rs1.812 billion for the day to Rs5.256 billion, from Rs7.088bn the previous day. It was despite the increase in trading volume to 173 million shares from 137 million shares.
The positive closing also seemed deceptive since out of the 371 shares traded on Tuesday, the losers at 213 were way ahead of the gainers at 131 stocks.
Figures released by the National Clearing Company of Pakistan showed that almost all local investors continued to book profit. Companies made net sale of $4.74 million worth. Banks sold $2.78 million, mutual funds $1.58 million and individuals $0.68 million worth stocks.
‘Other organisations’ bought shares valued at $2.09 million. Foreign inflow on Tuesday was again in the hefty sum of $7.68 million with the bigger contribution from Lever Overseas as the foreign parent continues to mop up shares held by other shareholders in the company’s Pakistani subsidiary, Unilever Pakistan.
Analyst Veer Bajaj at JS Global observed that after a positive start, the KSE-100 index continued its intraday correction and index consolidated above the 19,000 mark with low volumes witnessed in blue chip stocks.
On the political front the picture remained gloomy and shaky ahead of the coming elections. Value buying was observed in banking and insurance sectors with MCB, UBL, SNBL, NBP and AICL being picks of investors.
Investors also showed some interest in PPL on news of its expansion as the stock gained one per cent. Volumes were also registered in third tier stocks. Ahsan Mehanti at Arif Habib Corp stated that sentiments remained positive though trading was thin post major quarter earning announcements.
Renewed foreign interest and release of funds for PSO to ease circular debt in energy sector were positive despite concerns for $600m IMF repayments in May.
On the equity sales desk of Topline Securities, Samar Iqbal commented that in the absence of any trigger, market continued to consolidate ahead of general elections.
Renewed buying interest was seen in Fauji Cement amid expectation of better earnings due to debt swap. OGDC and PPL also remained on investors’ radar.
Market capitalisation decreased by Rs4 billion to Rs4.771 trillion on Tuesday, from Rs4.775 trillion the previous day.
Fauji Cement led the volume leaders with 62 million shares, traded 93 paisa up to Rs9.94. TRG Pakistan shed 26 paisa to Rs9.68 on 11m shares; Jah Sidd Co was down by 54 paisa to Rs10.48 on 6m shares.
Engro Corporation slipped 4 paisa to Rs135.03 on 6m shares, Soneri Bank added 13 paisa to Rs7.10 on 5m shares, Maple Leaf Cement declined 23 paisa to Rs18.27 on 5m shares, NBP was up by 19 paisa to Rs38.81 on 4m shares, Adamjee Insurance jumped by Rs3.20 to Rs82.49 on 4m shares PTCL down 26 paisa to Rs 17.61 on 3m shares and Lafarge Pak Cement gained 21 paisa to Rs6.30 on 3m shares.

Company News:

PSO again facing payment default: ISLAMABAD, May 7: With fuel stocks at power houses down to a critical two-day requirement, the country’s largest fuel supplier —Pakistan State Oil — has faced a total of nine defaults on international payments because of serious financial crunch.
An official said that diesel consumption dropped by over 7 per cent in the last two months, suggesting a slowing down in overall economic activities, except for agriculture sector even though a bumper wheat crop was expected this season.
A senior official said a furnace oil shipment due on May 5 was cancelled at the last moment because no bank was ready to open LC (letter of credit).
Another ship-load of furnace oil has been ordered to arrive on May 9 following disbursement of Rs10 billion by the federal government on the directives of the caretaker prime minister to ensure smooth supply on the three days around election-day.
“Even though oil and gas sector receivables against power sector have gone beyond Rs435bn, we are under strict instructions to ensure smooth fuel supplies for elections,” said a senior petroleum ministry official.
“The PSO has technically defaulted on international payments for nine times since August 2012,” he said, adding the bigger challenge is that a future default could lead to serious complications for the country because PSO handles more than 65pc of Pakistan’s fuel requirements. As a result, PSO has been forced to increase fuel supply to the power system to 20,000 tonnes per day from previous supply of 16,000 tonnes per day until Sunday.
The power sector owed Rs135bn to the PSO and another Rs300bn to the natural gas companies as of Tuesday, an official said.
The latest Rs10bn disbursements to PSO were overdue at the start of April after which fuel supplies worth Rs10bn had been provided to the power sector.
While discussing poor recoveries from the power sector, a recent meeting was informed that system losses at Sukkur and Hyderabad Electric Power Companies had gone beyond 39 and 32pc, respectively, and nobody could question their chief executives because of their close relationship with former ministers of the PPP government.
As of May 7, PSO’s total fuel stocks stood at 10 days of requirement that was expected to slightly improve when a fresh shipment arrived on May 9.
However, all the power stations have an average of two-day of fuel stocks.
He said the PSO had refused to continue with fuel supplies because of non-payments but was prevailed upon to take another brunt in the national interest to ensure smooth supplies for elections.
When contacted, PSO’s spokesperson Maryam Shah said a furnace oil shipment of 70,000 tonnes was due on May 9 that would be sufficient to meet country’s power requirement for election period. She said the company also had sufficient stocks of diesel and petrol for retail sales to meet market demand for 15 and 10 days requirement.
She said the PSO’s total receivables had gone beyond Rs149.7bn on May 7, including Rs139.5bn against power sector.
As a consequence, PSO’s payables to international supplies have exceeded Rs83bn and another Rs29bn to domestic refineries.
Responding to a question on oil cargo cancellation, she said “no cargo has been cancelled by PSO so far. However, due to letter of credit confirmation issue, one of the cargo of furnace oil which was due on May 5 has been delayed.”
Regarding international defaults, she confirmed defaults but added: “we would clarify that it were due to technical issues in letters of credit that have resulted in delayed payments to international suppliers approximately nine times since August 2012.
These issues arise due to non-payments of power sector.”
Despite financial constraints, PSO has always worked hard to meet the energy needs of the country. However, payments from our customers, especially power entities are required in a streamlined manner so that we may sustain the supply chain and continue imports, she concluded.

MOHAMMED SALEEM MANSOORI