Pakistan Stock Market Weekly Review

The KSE-100 Index gained 1.88%WoW to close at 23,673 points this week while average daily volumes recovered to 220.5mn shares after relatively subdued volumes last week. Key news flows this week included 1) tension between India and Pakistan escalated with exchange of fire over the border,

Higher interest rates ahead can stall Market rerating

Driven by higher GST, higher food prices and increase in petroleum product prices, CPI has jumped by 2.0%MoM to 8.3% in Jul'13. This is the highest increase in headline inflation since Sep'12 (+8.8%YoY). At the same time, core (trimmed) inflation has also jumped to 7.8%YoY in Ju'13 vs. 6.8%YoY in the previous month. 

KSE show up ward in last week

FY14 kicked off on a robust note with the KSE-100 Index gaining 5.58%WoW to end at 22,178 points after a decline of 3.2% last week. Average daily volumes during the week also increased by a robust 26.7%WoW to 262.6mn shares. In this regard, the key event this week was the staff-level agreement between IMF and Pakistan regarding a new program worth US$5.3bn which carries positives for medium-term macroeconomic stability. In terms of corporate news flows, key developments included 1) release of PkR161.2bn to IPPs to partly settle circular debt alongside a planned bond issue worth PkR127bn to OGDC, PPL and PSO and 2) proposed diversion of 60mmcfd gas reserved for Guddu Power Plant to the fertilizer sector. Bullish sentiment was also perpetuated by visiting UK PM David Cameron’s  promise to increase bilateral ties with Pakistan. Top gainers in the AKD Universe during the week included SNGP (+24.2%WoW), MEBL (+ 17.2%WoW), DAWH (+16.2%WoW), and ENGRO (+15.3%WoW). On the flipside, losers this week included INDU (-2.3%WoW) and PSMC (-2%WoW). Volumes during the week were led by PTC (107.9mn shares), KESC (98.2mn shares), FCCL (94.1mn shares), BOP (49.2mn shares) and MDTL (47.5mn shares).