MARKET REVIEW
The week started on a positive note, after three consecutive sessions of profit-taking. Despite oil prices supporting the heavy weights, index was only able to post nominal gains over the week and closed at 47,807pts (up 2.5% WoW). The closing however was an all-time high, providing a befitting end to CY16 where market performed 46% with Foreign Institutions Portfolio Investment (FIPI) registering an outflow of US$340mn. On WoW basis, the average volume traded decreased by 15.1% and the average value of shares traded decreased by 14.1%.
Cherry picking was followed by investors during the week, especially in the main board stocks while the sideboards garnered the lessthan- usual retail attention. Fertilizer sector performed after the sales number for Nov-16 posted a 10% YoY increase, while approval of ECC on additional gas supply of 26mmcfd from Mari field to EFERT provided much needed-clarity on continuation of gas supply. Oil stocks continued to support the index as oil posted a WoW increase of 2.6% in the aftermath of OPEC deal. On the other hand, banking sector remained in the limelight as annual result payout approaches. Cements also performed towards the latter half of the week in anticipation of good dispatch numbers for Dec-16 while autos continued riding on the positive sentiment surrounding the sector amid upcoming new models. All in all, activity remained low with investors preferring to be on the sidelines as year ends coupled with a rollover week.
On macro front, OGRA has proposed upto PRs6.93/l increase in POL prices next month which could have a negative impact on inflation. In the latest monthly bond auction, the government rejected all bids, making it the third auction in a row to have been rejected. The bid rates were much higher than cut-off rates in previous auction, which was possibly the reason for the government not accepting the bids.
OUTLOOK
Activity is expected to pick up next week as we enter the new year, and with start of result season. Though, investors will be selective due to absence of any major triggers next week. CPI inflation (expected to announce at start of next week) is expected to clock in at 3.8% in Dec-16, flat from last month’s reading. The political situation is slowly heating up after Pakistan People’s Party latest gathering but in there seems to be no near-term risk. However, the hearing on Panama Leaks issue will resume from next week and any negative development can create disruption in the market. Our top picks are EFERT, OGDC, PPL, UBL, BAFL, PSO, DGKC, LUCK, MUGHAL and INDU.
NEWS THIS WEEK
ECONOMIC INDICATORS & DATA POINTS
ECC approved export of 0.23mn tons of sugar (Dawn): In a meeting on Wednesday, Economic Coordination Committee (ECC) allowed export of 225,000tons of sugar, additional gas supply of 50mmcfd to Guddu Thermal Power Plant and 26mmcfd to Engro Fertilizers’ old plant.
MnPr urges PM to help clear power sector dues (Tribune): The Ministry of Water and Power has sought urgent intervention from the prime minister for the sanctioning of PRs175bn supplementary budget that would clear the power sector dues.
NEPRA approves a PRs3.6/KWh cut in electricity tariff for Nov-16 (BR): National Electric Power Regulatory Authority (Nepra) on Tuesday approved a refund of PRs 3.60/KWh in tariff of power Distribution Companies (Discos) and PRs0.6/KWh increase in tariff for K-E consumers for Nov-16.
5% custom duty maintained on import of yarn (BR): The government has maintained the customs duty on cotton yarn at the lowest level of 5% in order to support the textile industry.
Auction for PIBs- government rejects all bids as banks seek higher margin (BR): In the latest monthly auction, the government rejected all bids, making it the third auction in a row to have been rejected.
SECTOR AND CORPORATE HIGHLIGHTS
China interested to invest in auto sector (The Nation): A Chinese Company has shown keen interest in investment in auto sector of Punjab and has been affirmed by Punjab’s chief minister that provincial government would provide all facilities required in this regard.
Fauji cement to complete installation of WHR by Mar-18 (The Nation): Fauji Cement has signed a contract with a Chinese firm to install 7.6MW of Waste Heat Recovery power plant at its Line-I, which would be completed by Mar-18.
Receivables of PSO increase by PRs34bn (BR): The receivables of Pakistan State Oil have increased by PRs34bn just in one year period due to “measured” payments by the public sector entities.
Banking sector spreads fall by 31bps (The News): The banking sector’s spread fell 31bps to 4.97% YoY in Nov-16 on soft lending and deposit rates and inline with the central bank’s monetary stance.
Fertilizer sales up 20% YoY (Tribune): Total fertilizer sales for Nov-16 stood at 1.58mn tons, posting a jump of 20/68% YoY/MoM, according to latest data released by National Fertilizer Development Centre (NFDC).
OGRA proposed upto PRs6.93/ltr increase in POL prices (Dawn): The Oil and Gas Regulatory Authority (Ogra) has proposed PRs6.93/3.94/0.31/ltr increase in Kerosene/Diesel/Petrol prices for Jan-16.
CNG prices increased by PRs3.5/kg across Sindh (Dawn): Compressed natural gas (CNG) prices have been increased by up to PRs3.5/kg across Sindh, the first hike following the government’s decision to deregulate the country’s CNG market.
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STOCK MARKET SYNOPSIS
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LAST WEEK
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THIS WEEK
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% CHANGE
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Mkt. Cap (US$bn)
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89.0
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91.8
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3.2%
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Avg. Dly T/O (mn. shares)
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336.6
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285.9
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-15.1%
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Avg. Dly T/O (US$ mn.)
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164.3
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141.1
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-14.1%
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No. of Trading Sessions
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5.0
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5.0
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–
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KSE 100 Index
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46,634.0
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47,807.0
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2.5%
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KSE ALL Share Index
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31,828.8
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32,842.4
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3.2%
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