Karachi Stock Exchange

KARACHI STOCK EXCHANGE DAILY ANALYSIS

SUBMITTED TO: ZUBAIR CHODHURY

SUBMITTED BY: PARESH BHIMANI – 15014

DATE: August 12, 2014


Introduction:A stock market is a form of exchange market which delivers services for stock brokers and traders to buy or sell stocks, bonds, and other securities. Securities traded on a stock exchange include stock issued by listed companies. Stock exchanges often function as "auction" markets, with buyers and sellers completing transactions at a central location, such as the floor of the exchange.

For trading a security in stock market, a company must be listed at there. There are two types of market. One is Primary market and other is secondary market. In the primary market, the newly issued company stocks are traded while the later trading is done in the secondary market. Stock exchange performs various roles in economy. Like: Raising Capital. Stock exchange gives a facility to companies to raise their capital through selling their shares to public. There are many others forms of raising capital in stock market like: going public, limited partnership and venture capital.

Government at some levels can decide to borrow money to finance projects such as sewage, water treatment, or housing by selling securities knows as bonds. Those bonds can be raised by a stock exchange market where members of public buy them and then makes loans to government. The issuance of such securities can avoid the need, in the short term, to directly tax public to finance development. Stock exchange market is only the best source for raising capital.

Every country has its own stock market which deals with buying and selling of stocks of the companies in that country. I am going to discuss the stock market of Karachi which is known as the Karachi stock exchange. A stock market always gains or falls some points. There are many aspects behind that fall and increase. I am going to analyze the reasons behind their fall and increase. During Analysis, I found that the stock is not much predictable. Shares prices rise and fall of a company is largely dependent on economic forces. Share prices will remain stable when economy shows stability and company shows growth. A financial crisis, recession, depression can lead to crash stock market. Karachi stock exchange market experiences many ups and down in points as the Karachi political situation has never been stable so, it affects the companies and it directly affects to their share prices which will directly lead to fall and gain of points in Karachi Stock exchange.

Nowadays, KSE is showing a lot of improvement as Karachi stock exchange market has crossed 30000 on July 17, 2014. This is the first time in the history that Karachi stock exchange has crossed 30000 points it is because the political conditions, and economic conditions are stable which directly lead to increase in the Karachi stock exchange points. I have also analyzed the top companies of the Karachi stock exchange market which remain stable even all others companies share prices are declining. During analysis, I find that the Stock market of Karachi is largely affected by the political conditions of Karachi. There are many other reason behind its changes of points. In this report, I have looked at the KSE daily increase and falls and then analyze the reason behind its increase or downfall.

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KSE Daily Analysis

June 19, 2014:

KSE-100 Index -483.61 28674.37 KSE-30 Index -342.55 19717.18 KSE-All Index -348.76 21238.72

Analysis:

The Karachi Stock Exchange benchmark 100-index closed down by 484 points on Thursday. The reason behind this downfall was that the Lahore Incident was dominant on political situation, as there had been no clarity to it. There was also mismanagement on the side of the government to handle it. Due to Lahore incident, local institutions were giving selling orders, whereas they should have supported the declining market. Foreign buyers and retail clients were silent.

Of a total of 367 active companies in the session, 54 closed in the green, 300 in the red, while 13 remained unchanged.

June 20, 2014:

KSE-100 Index +17.47 28691.84 KSE-30 Index -11.40 19705.78 KSE-All Index -7.10 21231.62

Analysis:

The Karachi Stock Exchange benchmark 100-index closed up by 17.47 points on Friday. This small increase in KSE-100 Index was led by oil, cement and banking sectors recovering from panic selling on easing political noise. The traders were worried over political noise taking place in the country, so they kept themselves away from trading, which resulted in decline in turnover. Of a total of 324 active companies in the session, 174 closed in the green, 126 in the red, while 24 remained unchanged.

Analysis of the week (16/06/2014 to 20/06/2014):

The Karachi Stock Exchange KSE-100 index lost 1,039 points, or 3.5 percent, in the week on solid correction, while investors is likely to evolve around political situation next week, as a political leader is coming back to Pakistan from abroad.

The market direction will depend on the outcome of the political events such as the arrival of Tahirul Qadri, further clarity on the Lahore incident and beginning of the government’s appeal against the removal of Pervez Musharraf’s name from the exit control list in the Supreme Court.

Investors will keep a close look on civil military relations, which have been slightly tense due to the usual political instability in the country in the light of the developments this week.

Cement and banking stocks remained in the green ahead of better earnings expectations for June-quarter. Pak Suzuki Motors Company remained the star performer of the week after the Punjab government announced to launch yellow cab scheme. June 23, 2014:

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KSE-100 Index +307.19 28999.03 KSE-30 Index +226.5 19932.28 KSE-All Index +192.48 21424.10

Analysis:

The Karachi Stock Exchange benchmark 100-index closed up by 307 points on Monday. The reason behind that increase was that Pakistan Awami Tehrik chief ‘Dr Tahirul Qadri’ agreed to leave for his home following the promise by the Punjab governor on complete security. On Monday, stocks opened negative with the KSE-100 index falling -0.06% before observing recovery on the back of some political clarity till midday over successful negotiations and the end of stalemate with the Dr Tahirul Qadri, who arrived in Pakistan and was calling for a peaceful revolution.


June 24.2014:


Analysis:

The Karachi Stock Exchange benchmark 100-index closed up by 58 points on Tuesday. This small increase in market was led by oil, banking and cement scripts. The market was directionless following Monday’s political noise. As the Lahore incident is not fully resolved, so it may affect stock market negatively.


June 25, 2014:


Analysis:

The Karachi Stock Exchange benchmark 100-share index closed down by 76.10 points on Wednesday. The reason behind this downfall was uncertainty on Political front and future rollover kept investors careful as Karachi capital market remained bound and closed in red. The market was in an excited mood in the starting of the day making gains of 150 points, however selling pressure later in the day closed down the market by 76 points to close at 29,981 points.

Out of 358 active companies in the active session, 113 closed in green, 219 closed in red while 26 remained unchanged.

June 26, 2014:

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Analysis:

The Karachi Stock Exchange benchmark 100-share index closed up by 207.19 points on Thursday. The reason behind this increase is that, the foreign investors are gaining interest in Oil, cement and Banking sectors. As, payments on a pending circular debt of over Rs513 billion, higher banking spread at 6.11 percent for May 2104, rising local cement prices and rupee depreciation catalyzed the bullish activity.

Of a total of 328 companies active in the session, 213 closed in green, 98 in red whereas 17 remained neutral.

June 27, 2014:


Analysis:

The Karachi Stock Exchange benchmark 100-share index closed up by 155 points on Friday. The reason behind this gain is that, the foreign investors are gaining interest in the oil and cement stocks. As, overwhelming response for Pakistan Petroleum Limited kept the stock in the attention along with bringing investors’ interest in the Oil and Gas Development Company Limited and Pakistan Oil fields.


Analysis of week (23/06/2014 to 27/06/2014):

The Karachi Stock Exchange (KSE) index gained 652 points, or 2.3 percent, in the week on strong foreign inflows, while the market is likely to remain range-bound next week due to the start of the holy month of Ramazan.

Volumes are also expected to remain on the lower side, as trading times were reduced in the holy month of Ramazan. Oil, cement and banking stocks remained in the green ahead of better earnings expectations for June-quarter.

Inflation for June will be intensely watched; we are expecting it to clock in at 8.6 percent, Pakistan Petroleum Limited is likely to perform well, as its secondary market offering has generated a higher than expected interest.

The week saw foreign portfolio investment inflows increase to $15.44 million against $3.6 million last week. The market witnessed upward trend in four of the five sessions, while it declined on Wednesday on profit-taking.

June 30, 2014:

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Analysis:

The Karachi Stock Exchange benchmark 100-share index closed up by 308.77 points on Monday. The reason behind this increase is that institutions are taking interest in select stocks, following IMF approval for the release of $556 million on the third review of Extended Fund Facility and approval for PPL privatization bids.


July 1, 2014


Analysis:

The Karachi Stock Exchange benchmark 100-index closed up by 49 points on Tuesday on foreign interest in oil sector on the first day of the new fiscal year. As, the equities traded volatile on the first day of the new fiscal year with gains on reported institutional buying countered well by profit-taking at highs with the KSE-100.


July 2, 2014:

KSE-100 Index -24.78 29676.80 KSE-30 Index +1.75 20470.83 KSE-All Index -62.20 21958.04

Analysis:

The Karachi Stock Exchange benchmark 100-index closed down by 25 points on Wednesday on institutional profit-taking. Major decline was witnessed in the shares of Colgate Palmolive, which fell by Rs50.78 to Rs1,740 per share; followed by Pakistan Tobacco that declined by Rs41.39 to Rs1,223.61 per share. On the first day of fiscal year all institutions were taking their profit which cause a decline in market.


July 3, 2014:

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KSE-100 Index +20.99 29697.79 KSE-30 Index +16.18 20487.01 KSE-All Index -57.24 21900.80

Analysis:The Karachi Stock Exchange (KSE) benchmark 100-index closed up by 21 points Thursday to 29,697.79 points in the wake of interest. The reason this increase is that market witnessed another range-bound day where volumes remained low. Hubco remained the top pick for the day as it gained 1.6 percent. Highest increase was recorded in the shares of Shezan Inter, which rose by Rs44.37 to Rs965.97 per share, followed by Indus Motor Co that improved by Rs26.09 to Rs547.96 per share.

Of a total of 311 companies’ active in the session, 132 closed in green, 153 in red, whereas 26 remained neutral. July 4, 2014:


Analysis:The Karachi Stock Exchange benchmark 100-index closed down by 78 points on Friday in a range-bound session on low volumes. The reason behind this downfall is that stocks opened with no clear direction on lack of interest over a short one-session Friday. Oil and Gas Development Company Limited down by 0.6% and Pakistan State Oil by 0.3%.



Karachi Stock Exchange 100-index gained 276 points, or 0.9 percent, in the week amid strong foreign inflows, while next week volumes might remain at lower side.

Analyst said the market witnessed low volumes as expected in the first week of Ramazan, and the trend is expected to continue in the near term. Monetary policy review due mid of this month will be strongly watched, though we expect no change in discount rate this time around. Lastly, any noises on the political front could prove to be essential catalysts for the market direction looking ahead.

The market will also start pricing in strong anticipated banking and cement sector results, in addition to high payouts from energy stocks. Pakistan Petroleum Limited in particular is likely to perform well, as its secondary market offering has generated a higher than expected interest.

July 7, 2014: KSE-100 Index -90.88 29528.96

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KSE-30 Index -34.65 20401.57 KSE-All Index -67.74 21759.50

Analysis:The Karachi Stock Exchange benchmark 100-index closed down by 90.88 points on Monday. The reason behind this is that the market witnessed another dull session with low participation, as investors remained on the sidelines in the absence of activates. SSGC came under pressure after the ECC delayed the decision to increase gas prices.


July 8, 2014:


Analysis:The Karachi stock Exchange benchmark 100-index closed down by 31.39 points on Tuesday on careful activity ahead of monetary policy announcement due this week. Investors interest in select stocks supported the index to close above session’s low. Impact of revised Gas Infrastructure Development on textiles and fertilizer sectors and concerns over Sui Northern Gas Pipelines Limited new gas load schedule in Punjab played an important role in the Tuesday activity.


July 9, 2014:


Analysis:

The Karachi stock Exchange benchmark 100-index closed down by 20.28 points on Wednesday. The reason behind this downfall is that there was absence of any trigger as continuing shocking effect of the Ramazan attached with pre-Monetary Policy Statement sentiment dragged market into red zone. It is expected that market to remain range bound for next few trading sessions as investors remain sidelined ahead of Monetary Policy Statement.

Of the total 312 active companies in the session, 98 closed in green, 189 closed in red, while 312 remains unchanged.

July 10, 2014:

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Analysis:The Karachi Stock Exchange benchmark 100-index closed down by 124 points on Thursday on selling pressure in the absence of any trigger. Morning rumors of state funds hunting block buyer in the absence of system bids dragged the index, led by losses in MCB Bank, United Bank down 1.2 % and Pakistan State Oil down 1.4 %. Overall participation was very limited as major institutional players remained on the sidelines.


July 11, 2014:


Analysis:The Karachi Stock Exchange benchmark 100-index closed down by 35.06 points on Friday due to political uncertainty and also in absence of any triggers. All political parties should keep their differences aside and focus on national agenda as political instability is impending not only stock market but also the national growth. Political conditions should be improved in order to make Pakistan Equities market better as foreign investors should invest in it.



The Karachi Stock Exchange 100-index lost 302 points, or one percent, in the week on massive foreign outflows and the absence of any trigger, while volumes might continuously remain at the lower side next week.

Analyst said that, volumes loss is expected to persevere ahead in the month of Ramazan. First monetary policy statement of FY15 will be announced on July 19, which will be the key driver for the market momentum. Any noise on the political front could prove to be a catalyst for the market direction looking ahead. The market will also start pricing in strong expected banking and cement sector results.

In addition to high payouts from the energy stocks. Pak Services, Shezan International, Arif Habib Corporation, Fatima Fertilizer Company and Century Paper were the major gainers, while Allied Bank Limited, Jahangir Siddiqui and Company, TPL Trakker Ltd, Packages Ltd and K-Electric Ltd were the major losers.July 14, 2014:

KSE-100 Index +387.01 29705.07

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KSE-30 Index +308.82 20568.65 KSE-All Index +224.14 21818.51

Analysis:

The Karachi Stock Exchange benchmark 100-index surged by 387 points on Monday on institutional buying after Moody’s raised Pakistan’s debt outlook to stable from negative. Highest increase was recorded in the shares of Rafhan Maize, which rose by Rs 556.37 to Rs11,683.87 per share, followed by Murree Brewery that improved by Rs28.52 to Rs937.60 per share. Major decline was witnessed in the shares of Wyeth Pakistan Ltd, which fell by Rs207.46 to Rs4,020.04 per share, followed by Mitchells Fruit that decreased by Rs13.99 to Rs656 per share.


July 15, 2014: KSE-100 Index -21.1 29683.97 KSE-30 Index -13.57 20555.08 KSE-All Index +3.91 21822.42

Analysis:The Karachi Stock Exchange benchmark 100-index lowered by 21 points on Tuesday on institutional profit-taking. The reason behind this decrease is that equities remained range-bound to settle in the negative zone, as investors remained selective, while volumes were relatively reasonable as compared to the last week. Highest increase was recorded in the shares of Bata, which rose by Rs61.94 to Rs3,269.56 per share. Major decline was witnessed in the shares of Rafhan Maize, which fell by Rs384.03 to Rs11,299.84 per share.Of a total of 337 active companies in the session, 110 closed in the green, 194 in the red, while 33 remained unchanged.

July 16, 2014: KSE-100 Index +92.20 29776.17 KSE-30 Index +99.32 20654.40 KSE-All Index +66.55 21888.97

Analysis:The Karachi Stock Exchange benchmark 100-index closed higher by 92 points on Wednesday. The reason behind this increase is that foreign investors are continuously investing funds. The equities remained range bound in the green, as local investors continued to remain selective ahead of the earnings announcement. The day’s surprise was K-Electric down 4.2 percent that remained under pressure on the rumors of sponsors offloading their stake.Of a total of 342 active companies in the session, 132 closed in the green, 178 in the red, while 32 remained unchanged.July 17, 2014:

KSE-100 Index +400.94 30177.11 KSE-30 Index +315.86 20970.26

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KSE-All index +240.32 22129.29

Analysis:The Karachi Stock Exchange benchmark 100-index surged by 401 points on Thursday to hit an all-time high index by crossing 30,000 points barrier for the first time on strong foreign and institutional buying. Stock market did a lot of struggle in crossing the 30,000 points mark, which was expected in March, but due to several reasons, it was delayed and reached the landmark in July. Thursday’s rally was a reason of major foreign inflows and there were estimates of around $40 million inflows in the current month in banking and cement stocks.

Of a total of 349 active companies in the session, 221 closed in the positive territory, 96 in the negative zone, will 32 companies’ shares remained unchanged.


Analysis:The Karachi Stock Exchange benchmark 100-index increased by 48 points on Friday. The reason behind this small increase is that KSE-100 index consolidated its break above 30,000 levels on the last trading day of the week with volatile trading on a short day, as gains in energy on reported foreigners buying was countered by profit-taking in financials ahead of Saturday’s monetary policy announcement. Highest increase was recorded in the shares of Wyeth Pakistan Ltd, which rose by Rs193.49 to Rs4,064 per share.


Analysis of week (14/07/2014 to 18/07/2014):The Karachi Stock Exchange-100 index rose by 907 points, or 3.1 percent, in the week on massive foreign inflows after Moody’s upgraded Pakistan’s ranking, the while next week might continue upward trend on corporate results announcement.

Analyst said that, they expected strong foreign portfolio investment to continue, going forward. First monetary policy statement of FY15 was presented on Saturday, in which status was maintained as expected by the market analysts. Moreover, the International Monetary Fund’s fourth review discussion will commence on August 6, which will be keenly tracked. The market will also start pricing in strong anticipated banking and cement sector results, in addition to high payouts from the energy stocks.

This week saw foreign portfolio investment net inflows up by 192 percent to $24.2 million. The market witnessed downward trend in one of the five sessions. It also crossed 30,000 points for the first time on Thursday.July 21, 2014:

KSE-100 Index +188.34 30413.23 KSE-30 Index +155.66 21179.70

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KSE-All Index +131.95 22297.05

Analysis:The Karachi Stock Exchange benchmark 100-index increased by 188 points on Monday to a new all-time high of 30,413 points on institutional buying. The reason behind this increase is that stocks closed at an all-time high on higher trades after the State Bank of Pakistan hints at improving economic fundamentals. Renewed foreign interest in oil stocks and speculations ahead of major earning announcements due this week played a catalytic role in the bullish sentiment at the KSE. Another reason behind this increase is that Cement exports are rising, which cause KSE to close in green.


July 22, 2014: KSE-100 Index -11.14 30402.09 KSE-30 Index +1.56 21181.26 KSE-All Index -15.24 22281.81

Analysis:The Karachi Stock Exchange benchmark 100-index dropped by 11.14 points on Tuesday. Cement sector remained in the limelight as high volumes were witnessed in DG Khan Cement, Cherat Cement, Kohat Cement and Maple Leaf Cement. Highest increase was recorded in the shares of Bata which rose by Rs98 to Rs3, 348 per share. Major decline was witnessed in the shares of Pakistan Tobacco, which fell by Rs52.41 to Rs1,100.01 per share.



Analysis:The Karachi Stock Exchange benchmark 100-index on Wednesday continued upward momentum and increased by 63 points to an all-time high on strong earnings outlook, dealers. Renewed foreign interest, rising cement exports and higher international oil prices played a catalytic role in the bullish sentiment at the KSE. Highest increase was recorded in the shares of Bata, which rose by Rs167.40 to Rs3,515.40 per share. Major decline was witnessed in the shares of Wyeth Pakistan Ltd, which fell by Rs167.61 to Rs3,765.85 per share. Of a total of 326 active companies in the session, 139 closed in the green, 169 in the red, while 18 remained unchanged.July 24, 2014:

KSE-100 Index +9.32 30474.75 KSE-30 Index -6.53 21193.80

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KSE-All Index +50.30 22365.87

Analysis:The Karachi Stock Exchange benchmark 100-index closed almost flat in a range-bound session after Lafarge announced to sell its stake to Bestway Cement on Thursday. Analyst said that, the market witnessed unstable session, as investors gained momentum at the start of the day. However, profit-taking was witnessed towards the end of the day ahead of the long weekend. Textile sector remained under pressure despite 5.3 percent year-on-year growth in textile exports during FY14. Lafarge Pakistan remained the volume leader with 58.68 million shares on an increase of 21 paisas to close at Rs16.73 per share. Shares turnover in the futures market increased to 49.22 million from 39.53 million shares traded in the previous session.


July 25, 2014 was a holiday in the market decided by Investors.

Analysis of the week (21/07/2014 to 25/07/2014):

The benchmark index rose by 249.86 points or 0.8 percent to close all time historical high of 30,474.75 points during the past week as compared to 30,224.89 points of previous week’s closing. The KSE-100 index gained 32 percent Week on week higher average trading volumes of 173 million shares. Within the banking space Askari Bank Limited surged sharply during the week by 13% motivated by a startling turnaround in its operations and an unexpected dividend.

The market witnessed the earnings season taking its full grip in the outgoing week which led to sector specific triggers. SBP decision to keep the Discount Rate unchanged which was estimated, as the central bank supported its position gearing its weight towards the positive macroeconomic developments.

Status Quo maintained on Monetary Policy Statement by State Bank of Pakistan along with exciting corporate result season kept market stable in past week and closed in green zone.

Trading activity in the Karachi capital market is likely to remain dull next week due to the Eid holidays, as only two days of trading will be observed in next week.

July 28, 2014: KSE-100 Index -160.68 30314.07 KSE-30 Index -112.57 21081.23

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KSE-All Index -101.28 22264.59

Analysis:The Karachi stock exchange benchmark-100 Index closed down by 160.68 points on Monday. The reason behind this decrease is that trades were led by second and third tier stocks amid concerns for failing geo-political situation, depressing fertilizer sales data for June’14 and Article 245 of constitution invoked for security unrest in the country played a catalyst role in bearish activity despite strong earnings announcements in banking sector.

Trading took place in 313 companies where losers beat the gainers 176 to 116 while the value of 21 stocks remained intact.

Market is closed on July 29, 2014 to Aug 1, 2014, because of the Eid.

Conclusion:

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The Karachi Stock exchange market is the market where company’s shares are traded. Share prices are continuously increasing and decreasing as the country condition is changing. So, in this report I have analyzed the reasons behind those changes in points. The Karachi stock market in unpredictable, it depends on the country situation. If it is stable then stock market used to close in green where as if conditions are not stable than stock market used to closed in Red. During analysis of seven weeks of KSE, I find that KSE market usually perform well when economic conditions of Karachi are stable.In the 1st week of my analysis, the Karachi political conditions were not stable. Dr Tahir ul Qadri incident was dominant and there was no solution to it, which causes Karachi stock exchange market to fall by 483 points. So, the Karachi stock exchange market closed in red. Pak Suzuki was the star performer of the week.But in the following week when that Lahore incident is resolved the Karachi stock market experienced a sharp growth of 307 points in first day, 58 points in 2nd, and in 3rd day, it shows a growth of 207 points. After that Karachi stock market shows a little growth as the ramazan week was going to start and investors were not putting more money in the market. Meanwhile, the Karachi stock market experience a significant growth of 652 points. In first week of ramazan, the Karachi stock market gained 276 points which is because the Pakistan petroleum limited shares were approved on Monday for privatization which result in increase of 309 points on Monday and rest four days the trading were moderate as investors were not participating in trading due to Ramazan. In the week of ramazan, he traders didn’t participate much in the trading. In the 2nd week of Ramazan, Karachi stock exchange lost 302 points. The reason behind this decrease is that Karachi stock market experienced a dull trading in the whole week. The investors were not participating in trading as the monetary policy statement was announced on Tuesday but it is delayed for some reason which will be later announced at 21 July 2014. So, the investors were waiting for monetary policy to be announced. Pak Services, Shezan International, Arif Habib Corporation, Fatima Fertilizer Company and Century Paper were the major gainers, while Allied Bank Limited, Jahangir Siddiqui and Company, TPL Trakker Ltd, Packages Ltd and K-Electric Ltd were the major losers.In the 3rd week of Ramazan, KSE rose by 902 points because the Moody’s upgraded Pakistan’s ranking. Moody raised Pakistan debt from Negative to positive. Due to this foreign investors have shown a greater interest in market. This week saw foreign portfolio investment net inflows up by 192 percent to $24.2 million. The market witnessed downward trend in one of the five sessions. It also crossed 30,000 points for the first time on Thursday.In the last Ramazan week, the Karachi stock market increased by 249 points which is because on Monday, Monetary policy statement was announced which result in increase of 188 points. After that, the market showed a dull performance in the whole week as the market was closed in the next week due to Holidays of Eid. In the MPS, State Bank has decided to keep policy rate unchanged.Analyzing stock market was a great experience for me.

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