Stock market at a glance

MARKET REVIEW

Volatility gripped the index during the week and kept it from breaching 50,000 level. Major contributors towards this volatility were the Panamagate hearing, worsening law & order situation and concerns over tighter regulation of stockbrokers. Index closed the week at 49,008pts, marginally down by 0.7% WoW. Foreign Institutions Portfolio Investment (FIPI) registered net outflow of US$4.8mn. Average volume traded decreased by 9% WoW while average value traded decreased by 18% WoW.

Week started on a bearish note as systematic risks overshadowed company specific positive news flows. Index heavy weight ENGRO continued its decline during the early part of the week amid below expected dividend payout of PRs4/sh announced last week. However, in the later half stock recovered on the back of value buying. During the week Dewan and Bestway cement signed a non-binding memorandum of understanding for sale of Dewan Cement’s North plant along with related assets. While this notice send to the stock exchange had a positive impact on BWCL, DCL saw some selling pressure. Furthermore, Services Industries Ltd entered into a manufacturing and supply agreement with Total Parco Pakistan to provide it with lubricants. Also, ASL’s BoD approved revised proposal for expansion of production capacity of 650,000MT. During the week, results of some blue-chips were released which garnered mixed reactions from the investors. HUBC announced its 1HFY17 result, posting an EPS of PRs4.38/sh and a dividend of PRs1.50/sh, KAPCO announced its 1HFY17 EPS of PRs4.74/sh along a dividend of PRs.4.30/sh. On the last session of the week, NCPL posted its result for 1HFY17 with an EPS of PRs1.76/sh, however the management did not announce any cash dividend with the result which led to some heavy selling in the stock.

On the macro front, current account deficit widened by more than 90% YoY to $4.7 billion in July-Jan. Textile and clothing exports fell 1.30% YoY to US$1.064bn in January. Credit rating agency Moody’s revised up Pakistan’s real GDP growth for FY17 to 4.9%.

OUTLOOK

Moving forward, we expect any verdict announced by the Supreme Court on Panamagate scandal to have a significant impact market activity. As military operation continues, any disruption on the law and order front can also put a dent on the index. Our top picks are PPL, OGDC, UBL, EFERT, BAFL, PSO, PIOC, MUGHAL and DGKC.

NEWS THIS WEEK

ECONOMIC INDICATORS & DATA POINTS

CURRENT ACCOUNT DEFICIT STANDS AT US$4.7BN (DAWN): Current account deficit widened by more than 90% YoY to $4.7 billion in July-Jan, the State Bank of Pakistan (SBP) reported on Friday.

TEXTILE EXPORT DECLINE (DAWN): Pakistan’s textile and clothing exports fell 1.30% YoY to US$1.064bn in January. Product-wise details show that the exports of readymade garments fell 3.60% while those of knitwear dropped 3.44% in January.

MOODY’S EXPECTS PAKISTAN’S REAL GDP TO EXPAND (DAWN): Credit rating agency Moody’s expects Pakistan’s real GDP to expand by 4.9% in FY17 and 5% in FY18.

SECTOR AND CORPORATE HIGHLIGHTS

PROPOSAL TO INCREASE GAS TARIFF BY 5% TO ACCOUNT UFG LOSSES (DAWN): Independent consultants have suggested allowing five per cent unaccounted for gas (UFG) losses allowance to gas utilities in consumer tariff for the next five years with targets for their gradual decline.

THAR COAL POWER PLANT TO START OPERATING BY 2018 (TRIBUNE): CEO SECMC has said that even though the COD of Thar coal based power plants is June-19, they expect first unit to begin by the end of 2018.

AUTOMAKERS BULLISH ON PAKISTAN (TRIBUNE): Lucky Cement CEO Muhammad Ali Tabba has said that they plan to start producing 25,000 cars annually by the end of 2018 at its plant in Port Qasim. The Company will target a segment between Suzuki’s compacts and Toyota’s Corolla.

NEXT BUDGET LIKELY TO HAVE A SUBSIDY PACKAGE FOR FARMERS (DAWN): Secretary Finance Tariq Bajwa has said that the government is considering a subsidy package for farmers in the upcoming budget.

SUZUKI SHARES INVESTMENT PLANS (DAWN): Suzuki Motor Corporation of Japan has said that total investment of Pak Suzuki Motor Company and its vendors can touch US$660mn if existing players are offered same incentives as the new entrants.

SECP APPROVES MODARABAS WORTH RS800MN (DAWN): SECP’s Religious Board on Thursday approved prospectuses of two new modarabas – Habib Metro Modaraba and Orient Rental Modaraba worth Rs800Mn.

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STOCK MARKET SYNOPSIS
	LAST WEEK	THIS WEEK	% CHANGE
Mkt. Cap (US$bn)	93.5	92.6	-1.0%
Avg. Dly T/O (mn. shares)	353.9	321.8	-9.1%
Avg. Dly T/O (US$ mn.)	168.1	138.1	-17.8%
No. of Trading Sessions	5.0	5.0	–
KSE 100 Index	49,375.7	49,008.0	-0.7%
KSE ALL Share Index	33,484.6	33,166.3	-1.0%