Stock market at a glance

MARKET REVIEW

Index rode on the positive momentum and continued with the re-rating story this week. Even the investors’ cautiousness over an expected technical correction didn’t hamper the upward march as index closed the week at 49,038pts, up 2.6% WoW. Foreign Institutions Portfolio Investment (FIPI) registered net outflows of US$2.04mn. While the average volume traded increased by 42.8% WoW and the average value of shares traded increased by 43.8%.

Continuation of the positivity surrounding the re-rating theme led index to close yet another week at an all-time high. Fertilizers garnered investors’ attention in the initial trading sessions as strong sales numbers for Dec-16 built expectations of margin improvement for the fertilizer companies. Oil Marketing Companies posted positive returns on the back of increasing oil prices which can lead to inventory gains for the sector. Cement dispatches data for Dec-16 also beat expectations, posting a 3.3%MoM increase even during the current dull season. Similarly, engineering sector also performed on the increasing infrastructure demand with ASTL posting a return of 13.64% during the week. Dost Steel Limited (DSL) announced the commencement of operations from May-17, leading the stock to post 8.84% return over the week. National Refinery Limited (NRL) was among the investors’ favorite, after they announced to cut the dependence of bank loans by half for the new projects.

On the macro side, Consumer Price Index (CPI) clocked in at 3.7% for Dec-16, slightly below the expectations. With no change in petrol and diesel prices for first half of January, expectations for Jan CPI remain benign as well. In addition, Federal Board of Revenue provisionally collected PRs1.452trn during 1HFY17, falling short of the six-month target by PRs142bn.

OUTLOOK

Panama case hearing, now to be conducted on daily basis, looks to be the only concern for the market in the near term. Activity will pick up as we get through with the end-of-the-year effect. Though, we believe, some cautiousness can be seen as expectation of a technical correction is running higher. Our top picks are PPL, OGDC, UBL, EFERT, BAFL, INDU, PSO, PIOC, MUGHAL and DGKC.

NEWS THIS WEEK

ECONOMIC INDICATORS & DATA POINTS

Govt keep POL prices unchanged (The News): Government has decided to keep the prices of petroleum products unchanged after OGRA submitted its summary of up to PRs7/ltr increase in prices.

Shortfall in tax collection widens over PRs142bn (Tribune): The Federal Board of Revenue (FBR) provisionally collected PRs1.452trn during 1HFY17, falling short of the six-month target by PRs142bn, according to officials of the tax machinery.

OGRA notified gas price decrease for IPPs (The Nation): According to notification issued by OGRA, gas prices for IPPs have been reduced by 33.34% to PRs400/mmbtu while for fertilizer feed stock, gas prices have been reduced from PRs123.41/mmbtu to Rs123/mmbtu.

Govt to raise PRs2.7tn in Jan-Mar (Dawn): According to the auction target calendar issued by SBP on Tuesday, the government will raise PRs2.55tn via seven Market Treasury Bills(MTB) auction in Jan-March. Also, the government is going to borrow a total of PRs150bn in Jan- March through PIBs of three, five, 10 and 20 years of maturity.

SECTOR AND CORPORATE HIGHLIGHTS

PSMC increases WagonR prices (Dawn): Pak Suzuki Motor Company (PSMC) has increased the prices of WagonR (VXR and VXL) models by PRs20, 000 from 1-Jan-17.

Ministry of Commerce backs, albeit reluctantly, urea exports (BR): Ministry of Commerce has reportedly proposed the export of 0.3mn tons of urea, after considering possibility of sizeable pressure on the domestic price and gas supply situation.

Contracts worth $2bn are ready for Dasu Hydropower Project (The Nation): World Bank (WB) Country Director, Mr Patchamuthu Illangovan, has said that two contracts (worth $2 billion) for the Dasu Hydropower project are ready for the signing, which have been awarded to the lowest evaluated bidder.

Govt plans PRs0.1/unit surcharge to cover Neelum – Jehlum cost overruns (Dawn): The government is expected to impose PRs0.1/unit surcharge for all electricity consumers (excluding consumers of K-electric) to finance cost overruns of PRs500bn and extend Rs3/unit reduction in power tariff for industrial consumers for six months.

Cement dispatches grew by 8.65%YoY (The News): Cement dispatches grew by 8.65%YoY to 19.81mn tons, while exports decreased by 3.53% YoY. On MoM basis, sales for Dec-16 stood at 3.2mn tons registering an increase of 3.3%MoM to 3.6mn tons.

KE shelves conversion of FO-based plants to coal (The News): K-Electric (KE) has shelved the project of converting its FO-based plant to coal-based due to unviable tariff approved by NEPRA. Similarly, Pakgen and Lalpir power have shelved their projects of converting FO-based power plants to coal due to the same reason.

NRL decreases its dependence on bank loans (Tribune): National Refinery Limited (NRL) has cut half its dependence on banks’ loan for expansion and introduction of better quality diesel in demand for Euro-II vehicles by Jun-17. The Syndicate Term Finance Facility has been reduced from Rs24.2 billion to Rs12.1 billion.

Petrol sales post a 21%YoY jump (Dawn): Petrol sales rose 21% YoY to 3.3mn tons in 1HFY17, according to data released by the Oil Companies Advisory Council (OCAC). Sales of petrol in December stood at 0.54mn tons, which was 16.7%MoM.

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STOCK MARKET SYNOPSIS
	LAST WEEK	THIS WEEK	% CHANGE
Mkt. Cap (US$bn)	91.8	93.5	1.8%
Avg. Dly T/O (mn. shares)	285.9	408.3	42.8%
Avg. Dly T/O (US$ mn.)	141.1	202.9	43.8%
No. of Trading Sessions	5.0	5.0	–
KSE 100 Index	47,807.0	49,038.2	2.6%
KSE ALL Share Index	32,842.4	33,426.4	1.8%