results and elections 2008

Today the Karachi Stock Exchange closed in the positve zone.

KSE 100 up by 23.45 (+0.17%) to close at 14018.45
KSE 30 up by 7.62 (+0.05%) to close at 16767.55

Volume was 67.22 mn shares, the lowest since April 02, 07

Experts were of the view that the KSE 100 can witness range bound activity with low trading volumes untill elections Feb 18, 08.

This was expected as experts, dealers and market punters were of the view that the market can get into a consolidation phase.

As for the results market participants are optimistic and holding on to their expectations high as these reasons will show growth in terms of dividend yield and as well as capital gain.

According to newspapers on the economic scenario, President Musharraf has rejected the idea of cutting the Public Sector Development Program (PSDP) for the budget 08-09.

On the other hand, Federal Minister, Dr Salman Shah has also said that Pakistan will launch Global Depository Receipts (GDR) for National Bank of Pakistan, Habib Bank Ltd and Kapco and plus Euro bonds to narrow down the current deficit gap.

Along with that government officials have also stated on unofficial news that Privatization Commission will now be playing a more active role in the future and pick up its agenda that it left in the last quarter of current year 07. It will be a matter of time to see how the Privatization Commission comes up with new tricks and measures to sell strategic public holdings to the private sector.

The tightened monetary policy for the next 6 months has been put into foreplay to curtail core-inflation. Dr. Shamshad Akhtar, governor SBP has said that real interest rates are the lowest in the region as well. Increasing the discount rate and increasing the cash reserve requirement by 100 basis points is just the step that SBP had to take to control inflation as a high inflation can hurt the economy more compared to with a high discount rate.

Questions are being raised that what are the other incentives that government is offering to the foreigners to do business in Pakistan. In an attempt President Musharraf also did his Europe tour which hopefully should be fruitful in the months to come if everything is in accordance.

Talking in a more broader prospective the social economic indicators are not pleasant as well. Fears have grasped the Pakistanis especially in the mega cities (Karachi, Islamabad and Lahore) that suicide bombs are a major treat to the society and as well to the economic activities.

High net worth individuals, army personnel, white collar job and retail people are all in the state of mind that Pakistan is a perfect breading ground to cultivate suicide bombers. This is the image that we have internally let alone external. I personally believe that we need to get rid of this image. It’s not me but many individuals are stuck in this lope on how to find ways to educate and make everyone believe that working together we can make a difference.

Anyway coming back to the stock exchange, today we saw a different set of volume leaders.

Major contribution to KSE 100 index was seen in the following sectors:
Investment Banks, companies and securities
Commercial Banks
Tobacco
Pharmaceuticals

Major decline contributed to KSE 100 was seen in the following sectors:
Power generation and distribution
Oil and Gas Marketing Companies
Oil and Gas Exploration Companies
Insurance
Cements
Fertilizers
Refinery
Telecommunications

Looking at the Oil sector decline was seen and it can be mainly related to the international oil prices that are trading below the $90 / barrel.

There is no reason yet why Banks are taking the lead for the time being.

Some of the top news was that old news is gold when dealers were of the point of view that last year in November 07 Oman Telecommunications Co had offer to acquire 60% of Worldcall at Rs 25 per share. We did see a rally in WTL today.

Recommendations:
Buy on high dividend paying stocks in particular, OGDC, FFC, FFBL and KAPCO for a one year tenure.
Investors should avoid heavy leveraging as technically the 14000 level is a major resistance level. If 14100 and 14200 levels are breached then the index 100 will be technically charged to breach 14500.