As the result season draws to a close, equities seem to be devoid of any major triggers. However some key results such as PTC, NBP, LUCK and PPL are still due and will be important for market direction in the coming days.
Thursday, October 29, 2009
Wednesday, October 28, 2009
Market Close !
With results season almost at its climax, we feel market lacks triggers and is likely to follow FII flows, going forward. Declining law & order situation is likely dampen investor sentiment and we recommend longterm plays with downside support.
28 october, 2009
Research Reports for 28 October, 2009
BMA
Elixire
- National Bank Pakistan - 9MCY09 Earnings Preview
- E&P Wellhead Price Revision - In line with expectations, declines already incorporated
KASB
IGI
Tuesday, October 27, 2009
Market Close !
Pakistan stocks closed down 58points with dull volumes on disappointing outcome of yesterday's high level political meeting between opposition leaders and the President. Stocks traded positive most of the day with late selling pulling the index down to close in red. Banks dragged the market with index heavy MCB, HBL and UBL down mainly on profit booking as rumors of FII outflow coupled with talk of State Owned Institution selling did rounds. Cements rallied today as investors await Competition Commission hearing outcome with rumors of out-of-court settlement and chances of reduced penalty on cement players on charges of cartelization. Adamjee Insurance AICL PA traded +5% at upper lock on better than expected result due 30th October. Engro Chemicals closed flat with company to announce results tomorrow where we expect EPS PKR6.54 -42%YOY on the back of higher financial charges and lower dividends from subsidiary companies.
Secretary of State Hilary Clinton visit and hopes of an official announcement of power sector investment package by US is likely to keep oil stocks in the limelight. Moreover, any progress on the war on terror and positives on political front could push stock higher.
Monday, October 26, 2009
Market Close !
Pakistan equities gained 223points to close up 2.4% on better than expected earnings and hopes of improving political climate as former Premier Nawaz Sharif (key opposition leader) meets President Zardari today. Moreover, grounds gained by army in the military operation against terrorist in South Waziristan were also cheered by the market. A flood of corporate announcements before the start of trading today kept interest alive in early trading. Much awaited JSCL PA result was one of the first announced with earnings keeping the stock steady closing +2%. MCB PA hit upper lock as investors continued to accumulate the stock after 9MCY09 earnings announced in late trading on Friday. Fauji Fertilizer FFC PA also announced nine month earnings that grew by over 23% and cash payout of PKR3/sh in line with market expectations with stock closing flat. United bank traded volatile ending the day up 2.3% despite below than expected results at EPS PKR6.2.
Upcoming visit by Sec of State Hilary Clinton and hints of possible announcement of US investment in Pakistan energy sector during her visit this month end are likely positives for oil and power stocks. Having said this, we feel overseas flows will continue to determine market direction in the short term. However, with very little excitement left in corporate earnings, market will be lacking major triggers, with some positives on the war on terror the unlikely cheer.
Market Close !
With market down over 7.5% this week, we expect equities to pick with 9000 being crucial support level. Key will be FII flows and a quick and successful operation against militancy in South Waziristan. Market will track JSCL results on Monday with speculation the stock will post Q1 PKR4.5 EPS.
Market Close !
Pakistan equities witnessed volatile trading closing the day 1% down. Market opened on a positive note but index soon slipped in the red amid news of fresh attacks on military personal and Supreme Court in Islamabad. Precarious security situation and fear of FII outflow led to panic selling that dragged index below the key 9000 level intraday. Late buying mainly spurred by talk of large State Owned Institutions activity covered some of day's losses with oil stocks pushing index up above 9100. MCB faced the brunt of selling with stock closing 2.3% down despite +2%YOY expected earnings tomorrow. PSO will also announce its 1QFY10 results tomorrow where we expect PKR15.3/sh and cash payout between PKR3-5/sh.
We expect market to follow developments on the army operation in SWA and remain sensitive to law and order situation and FII flows
Wednesday, October 21, 2009
Market Close !
We expect market to monitor FII activity and more importantly the security offensive by the army against terrorists which is going to be crucial in our view. This operation in our view must end quickly otherwise could very well linger on, which will play on investors minds.
Tuesday, October 20, 2009
Market Close !
Pakistan equities bounced back to cover some of yesterday's losses gaining +1.7%. Financials led the recovery as State Bank announced relaxation in regulations related to provisioning. As per the new rules, banks with infected loan portfolio and high exposure to corporate loans (high collateral against loans to increase advantage) are likely to benefit. We believe this move is positive for the banking sector and will certainly improve investor sentiment, however the quantum of the impact will only be know at year end (4Q results). NBP, UBL and HBL closed at upper limits on the news. In line with expectation, oil stocks also pulled back with POL trading strong ex dividend (PKR10/sh Cash payout). Company is to announce 1QFY10 results in couple of days where we expect +25%QOQ earnings jump on the back of 13%QOQ oil prices increase. Cements took opposite direction to market as lower cement retail prices (hurting retention prices) and development on case against cement industry on alleged charges of cartelization forced stocks to remain in check.
South Waziristan offensive continues with army making significant grounds.
Market Close !
akistan equities plunged amid fluid security situation with index shedding over 400points to close down 4.3%. Market opened on a cautious note as locals talked of concerns over strong statements from Iranian authorities over alleged Pakistani groups' involvement in weekend bombings in the border region. Moreover full scale operation in SWA against militant outfits and closure of schools in certain parts of the country due to poor law and order situation dampened mood. Support below 9,500 was absent possibly because of brokers squaring client position due to stringent new risk management rules and apparent lack of buying interest from both local and foreign players. Today's volume leader AHSL had a wild ride at day end with stock picking up from lower lock to gain over 7.5%. Company announced PKR5.37 earnings per share for 1QFY10 in early trading beating market expectations.
Monday, October 19, 2009
Market Close !
Announcement of key result dates kept blue chips in limelight with AHSL leading the volumes chart (board meeting later today with results expected on Monday). Oil stock facing brunt of selling with yesterday's star OGDC taking the hit as in the case of PPL with locals trimming positions ahead of the weekend. With earnings season in full swing next week, we expect market to remain volatile with index testing highs. Financials are also likely to see some interest with strong rumors of State Banks circular on bad loan relaxation doing rounds.
Market Close !
Although equities today were peppered with volatility, market remained buoyant for most part of the day closing up 42points. US explanatory note on Kerry- Lugar bill was amongst the foremost drivers of positive sentiment along with the news that government would tax capital market and agriculture sector within 3yrs, as opposed to previous plans of July 2010. Suicide bomb in Northern areas and coordinated attacks on three different security facilities in Lahore draged index. However, stocks soon recovered led by index heavyweights OGDC and PPL witnessing a sharp increase fuelled by rumors of aggressive FII accumulation and announcement of 1Q results date (OGDC: 29thOct, PPL: 31st Oct). Additionally announcement by ENGRO to venture into milk, rice and urea exports resulted in spiked volumes with stock gaining 1.7%. Financials went opposite to market direction with reportedly NIT (state owned largest mutual fund) offloading.
Given that the security situation does not deteriorate any further we expect market to rally upward in the upcoming days on the back of an exciting result season starting from next week. AHSL results tomorrow after market, to be announced before next week's trading will set short-term tone.
Sunday, October 18, 2009
Market Close !
Equities bounced back to close higher above 9800 amid talk stock market regulator may accede to broker pressure to ease margin requirements for the new risk management system. PSO attracted most volumes in early trading on hopes of better earnings during 1QFY10 to be announced on 23 October. Volumes picked up today after two dull sessions with activity mainly Oil stocks as POL, trading SPOT (PKR10/sh Cash payout) gained. FFBL also in focus hit upper lock on the back of better DAP off take and higher payout expectation in the coming 1Q results. Holding stocks AHSL and JSCL performed exceptionally well leading the volumes ahead of results.
Tuesday, October 13, 2009
Market Close !
Equities witnessed another dull day (USD67mn worth shs traded) and remained sideways mainly attributable to the new risk management system. Trading kicked off on positive note as investors cheered media reports confirming USD1bn aid from Japan (as per FoDP commitment). Rumors in the market that many brokers are not able to execute orders as new the risk system requires client level margin calls dented sentiment and forced investors to remain sidelined. We did expect market to face hiccups as measures to strengthen and effectively manage systematic risk are implemented and brokers get comfortable with the latest system. Moreover, slowdown in FII participation (less than USD4mn yesterday) and likely absence of significant foreign flows today, possibly due to fluid security situation, indicated by market volumes ensured locals remain cautious at current levels.
Monday, October 12, 2009
Market Close !
Pakistan equities closed down -1.3% on low volumes after the tragic weekend terrorist attack on Army headquarters. Renewed security fears were seen as a major threat to incoming FII flows and overshadowed positives on macroeconomic front with record remittances at +24%YOY in first quarter and lower trade deficit -45%YOY in 1QFY10. Furthermore, inflation numbers announced during trading hours, standing at 21 month lows beat expectation but did little to cheer mood. CPI inflation at 10.12% in September vs. 10.69% last month certainly paves way for policy rate cut in November this year with our economist eyeing at least 50bps reduction and further 100bps early next year. Investors abandoned any hope for intraday recovery after another bomb blast that rocked northern city killing over 30 people. Interestingly, none of the blue chips had an active day with most activity witnessed in holding companies and second tiers. One should also note that from today the new risk management arrangement takes effect with client level margin possibly hurting small investors capacity to trade via small brokerages. We are of the view that this new risk management measure will lead to better shock absorbing capacity in bear market but would result in hiccups as members get comfortable with netting system.
Sunday, October 11, 2009
Market Close !
Equities remained buoyant through out the day as index flirted near the 10,000 levels on continuous foreign buying. Stocks took a positive cue after Templeton's Mr. Mark Mobius stated that emerging markets and in particular Turkey and Pakistan were still cheap led to continued frenzy. However, turnover was lower probably after the tragic bomb blast in Peshawar in the morning and also emerging situation over the Kerry-Lugar bill, that induced some profit taking. Interestingly, banking stocks remained positive on the back of rumors that the Forced Sale Value relief will come through soon (we hear next week), benefiting smaller banks and also whispers that a large crossing took place in BAFL (the bank will also benefit with sale of Warid shares to Singtel).
With the exception of a relief measure from central bank in the face of FSV, there are no likely triggers due in the imminent future due to which we expect the market to correct in the range of 3-5% during early trading next week. However, AHSL board meeting (Wednesday), is likely to keep interest in the stock alive, as the case maybe for JSCL that has shed over 5.8% this week.
Thursday, October 8, 2009
Market Close !
An extremely volatile trading session ended with market closing down below 9,750 as political debate on the US Kerry-Lugar bill heats up. Equities traded higher in early trading with index touching intraday high of 9,937 ignoring strong statement issued by the Pakistan Army high command that could potentially lead to a rift between two major pillars and also putting on hold much needed USD inflows. Stocks faced strong resistance at 9900 level with locals aggressively selling. LUCK had an extremely volatile day dipping by 7% in a matter of seconds amid reports Saudi Arabia has lifted ban on cement exports but the stock continued to solicit interest probably due to upcoming board elections (USD28mn worth shares traded today). PTC PA too closed at lower lock as media reported USD500mn arrears of PTC privatization proceeds because of pending real estate title issue.
Today's breather was way overdue, although we feel the market should correct a further 4-5% before we recommend any fresh buying. A possible positive trigger could well be amendments in K-L bill by the US after its criticism by Pak Army and major political parties. Further, any relief to banks by the Central bank will lead to continued upside in financial sector.
Wednesday, October 7, 2009
Market Close !
The most interesting event today was the media interview of Mr. Mian Mansha, Chairman, Nishat Group (MCB, AICL, DGKC, NML and NPL) at the stock market floor. He mentioned the RBS deal and hitches that have cropped up since they had bid for the Pakistan operations and has hinted at a resolution soon.
Besides, he stated that the business community if allowed can attract more funds than the Kerry Lugar bill, which seems to be a direct attack on current Government policies (possible attack on the RPP's policy).
With locals either sidelined or net sellers, the market remains in the grip of some large individuals who are contributing to 10-20% market volumes. We maintain a cautious view, although we feel it will peak at 10,200 levels, probably this week.
Market Close !
Increasing political noise and debate amongst legislatures on Kerry Lugar Bill tomorrow could likely send some jitters with possibly volatile trading ahead.
Tuesday, October 6, 2009
Market Close !
With market lacking immediate triggers, the Army preparing itself for a grand operation against extremists in the treacherous South Wazirstan region and possible court cases against the ruling party men that benefited from the notorious NRO, we expect equities to remain sideways. Once again foreign flows will determine the market direction as locals are not willing to take lead.
Market Close !
Equities closed lower despite US Congress passing US Kerry Luggar Bill paving the way for aid to Pakistan. After remaining higher in early trading primarily cheering the bill, market went into the red led by selling in Mansha Group shares. NML and MCB were both weak amid media reports that RBS Operations deal may have hit snags and possibly the group may come under Government pressure for not participating in the TFC issue that was raised for the circular debt. Besides, market braced itself for POL PA and ATRL PA results with the former announcing them right at the end of trading. POL PA surprised the market with PKR10/share cash payout with earnings slightly lower than expectations (EPS PKR23.75). We also feel new exposure rules commencing from today may have influenced selling pressure, as client level margins and each ID level margins rules will now apply, mitigating market risk.
We feel the market is consolidating around current levels with locals mostly selling. With lack of triggers in the short term, we can expect to see 9200 levels. However, key to market sentiment will be FII flows, as locals are mostly confused with the near term direction
Sunday, October 4, 2009
Market Close !
Equities witnessed yet another volatile session as market opened in green zone but soon slipped into the negative on the back of disappointment on yesterday's Monetary Policy announcement. This see-saw trend continued throughout the day as the index finally shed 125 points at day end on the last of the quarter. Surprisingly, market volume in the benchmark index was dominated by second tier stocks with OGDC being the only blue chip amongst the top ten volume leaders. MCB took a hit as news that government was creating hurdles in MCB bank's deal of taking over of Royal Bank of Scotland over non-cooperation by MCB Bank to resolve the issue of circular debt in energy sector hit wires.Although equities are expected to remain volatile for the remainder of this week and we recommend accumulation below 9250. POL FY09 results and ATRL's result are set to be key triggers for tomorrow. POL is expected to post FY09 earning of PKR24.2/share, a 23% YOY decline and a final cash dividend of PKR4.5/sh, bringing the full year payout to PKR12.5/sh.
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