Equities remained positive driven by sustained foreign funds buying as the index whizzed passed 8,600 levels. Massive interest in E&P giant OGDC PA was witnessed once again on reported FII's interest followed by financials (MCB PA & NBP PA). Incidentally, NBP PA announced its CY09 results that accounted for higher bad loans that resulted in lower earnings EPS PKR5.87, but stock surprised everyone closing the day upper lock. Similarly, MCB PA remained strong throughout the day despite trading SPOT for cash payout as did UBL PA as market bets on higher 3QCY09 earnings. Textiles (NML PA) and cements remained weak on reports that Central Bank may gradually remove long term finance facility being given to exporters with textiles likely to be hit the hardest. Cements were down amid reports that the competition commission authority had taken notice of the cement cartel, local price manipulations etc. POL and PPL took a breather today with some profit taking with PSO taking news about its circular debt being cleared positively.
We feel oil stocks are ripe for a correction and we recommend accumulation in banking stocks particularly UBL PA and NBP PA. Investors should also be wary about the escalating security situation and possible political noise that could impact equities in the short term. Needless to say, foreign funds investment will continue to drive the medium term direction.
Source: Elixire - Closing Bell - Laggard financials take charge