A holiday-shortened week ended with the stock market being run over by the bulls as the benchmark KSE-100 index shot up by 553 points (1.8%) in three days to close at an all-time high of 30,930.
The market’s strong performance came on the back of significantly low inflation numbers for the month of October and strong performances from the cement and automobile sectors. Investors overlooked the oil and gas sector, which continued to be a laggard for the market.
The big news of the week came when inflation figures for the month of October were revealed. Inflation for the month stood at 5.8%, a steep decline from 7.7% in September. With oil prices declining, price of essentials like fuel and electricity have also come down and are now reflecting in the lower inflation numbers.
The announcement all but confirmed a much-awaited discount rate cut in the upcoming monetary policy announcement of the State Bank of Pakistan and led to a flurry of activity in highly leveraged companies. The State Bank’s announcement is due later this month and a rate cut is likely to further bolster the market.
The cement sector was the star performer as declining fuel prices coupled with strong expected demand in the coming months led to heaving buying in the sector. The sector as a whole climbed 8% during the week, with gains being seen in all major cement manufacturers.
The automobile sector also shared the limelight as Japanese yen continued to weaken against Pakistani rupee. Pak Suzuki Motors led the way with a gain of 12.7% during the week, followed by the Indus Motor Company which also climbed 10%.
The fertiliser sector also put up a decent performance as Engro Fertilizer rose 5.1% during the week on the back of continued deleveraging and expectations of a discount rate cut. The company’s massive debt profile makes it one of the biggest potential gainers if and when the discount rate cut is implemented.
The oil and gas sector, however, continued to bear down on the KSE-100 index as oil prices continued to decline and a floor price of Rs216 for the secondary offering of OGDC was announced. OGDC’s share price continued to decline during the week but recovered slightly on Friday.
Foreigners also returned with a bang as they mopped up equity worth a net of $25.4 million during the week as compared to a sell-off of $7.84 million in the previous week. The return of foreign buying was a welcome sight for local investors as it had dropped off considerably in recent weeks.
Average trading volumes shot up 54.8% and stood at 267 million shares traded per day. Average daily values also rose 33.7% and stood at Rs.13.5 billion per day. The KSE’s market capitalisation rose to Rs7.16 trillion at the end of the week.
Winners of the week
Jahangir Siddiqui and Company
Jahangir Siddiqui and Company Limited is an investment company, offering share brokerage, money market, advisory and consultancy, underwriting and portfolio management services.
Hum Network Limited
Hum Network Limited operates satellite television channels. The company operates a channel targeted primarily at women, one about food, and one that covers lifestyle and entertainment.
Mari Gas
Mari Gas Company Limited specialises in the drilling, production and selling of natural gas.
Losers of the week
JDW Sugar
JDW Sugar Mills produces and sells crystalline sugar. The company is located in District Rahim Yar Khan and formerly named United Sugar Mills Limited.
GlaxoSmithKline
GlaxoSmithKline Pakistan Limited manufactures and markets pharmaceuticals and animal health products.
Colgate Palmolive
Colgate-Palmolive Pakistan Limited manufactures and sells detergents, personal hygiene, and a variety of other products.
Published in The Express Tribune, November 9th, 2014.
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