Index remained volatile during the week, breached the 50,000 level during intraday but failed to closed above 50,000 as the negative news flow and uncertainty kept the upside in check. Index closed the week at 49,376pts, marginally down by 1%. Foreign Institutions Portfolio Investment (FIPI) registered net inflow of US$4.2mn. Average volume traded decreased by 14.5% WoW while average value traded decreased by 5.2% WoW.
After starting the week positively, it was the rumors on stay order over anti-dumping duty on steel products which led to some heavy selling in scrips like ISL and ASL. However towards the latter half of the week, as the dust settled, the same stocks partially recovered their losses. The law and order situation in the country also played its part in making the investors’ cautious as 8 bomb blasts took place in the country in the space of 5 days, as a result of which volumes decreased. Furthermore, smooth resumption of hearing over Panama Leaks created a positive sentiment in the market. Millat Tractors, along with its result, announced its plan of entering into the consortium setting up a Greenfield plant of Hyundai Motors which resulted in the stock closing on its upper circuit for the day. During the week, results of some blue-chips were released which garnered mixed reactions from the investors. HBL attracted positive flows after it posted an EPS of PRs21.69 for CY16, while on the hand, UBL moved into red after it posted an EPS of PRs22.65 for CY16. In the cement sector, DGKC and FCCL posted an EPS of PRs10.28 and PRs0.94, respectively, for the 1HFY17, impact of which largely remained neutral on both stocks. Towards the end of the week, ENGRO posted its result for CY16, with a below expected divided of PRs4/sh, which led to some heavy selling in the stock.
On the macro front, remittances in the 7MFY17 came down by 1.8% YoY to US$10.95bn from US$11.15bn in the same period last year. As per SBP, FDI increased 10% YoY to US$1.16bn in 7MFY17. FDI in January slightly rose to US$81m from US$78m in the same month of the last fiscal year. Lastly, budget deficit during 1HFY17 increased to 2.4% of GDP against target of 1.8%.
Moving forward, we expect result season to drive the activity in the index as no major trigger appears in sight. Panama Leaks case looks to be moving forward smoothly while any disruption on the law and order front can damage the optimism surrounding the index. Our top picks are PPL, OGDC, UBL, EFERT, BAFL, PSO, PIOC, MUGHAL and DGKC.
NEWS THIS WEEK
ECONOMIC INDICATORS & DATA POINTS
BUDGET DEFICIT WIDENS TO PRS799BN (TRIBUNE): Budget deficit during 1HFY17 increased to 2.4% of GDP against target of 1.8%. Non-tax revenue declined due to reduction in SBP profit and non-disbursement of Coalition Support Fund, while FBR’s tax revenue grew by only PRs79bn.
FDI ROSE 10% YOY IN 7MFY17 (DAWN): SBP reported on Wednesday that FDI increased 10% YoY to US$1.16bn in 7MFY17. FDI in January slightly rose to $81m from $78m in the same month of the last fiscal year.
IRAN READY TO INCREASE ELECTRICITY SUPPLY TO PAKISTAN (TRIBUNE): Iran is ready to increase electricity supply to Pakistan from the existing 130MW to 3000MW, said Iranian Consul General Ahmad Mohammadi.
OVERSEAS PAKISTANI SENT US$1.488BN IN JANUARY 2017, UP 1.45% YOY (TRIBUNE): Remittances in the 7MCY17 came down by 1.8% YoY to US$10.95bn from US$11.15bn in the same period of the previous year.
SECTOR AND CORPORATE HIGHLIGHTS
MILLAT TRACTORS MULLS JOINING HYUNDAI-NISHAT VENTURE (TRIBUNE): Millat Tractors Ltd has announced to explore the option of joining the upcoming venture between Hyundai Motor Company and Nishat Mills Ltd for production of passenger cars and light trucks.
PRICES OF PETROL, HSD INCREASED BY RE1 EACH (DAWN): Government has increased the prices of petrol and high speed diesel by PRs1/litre each with immediate effect.
PNSC TO BUY THREE SHIPS COSTING US$65MN (DAWN): The Pakistan National Shipping Corporation (PNSC) is going to purchase three tankers at an estimated cost of US$65mn, according to Minister of Ports and Shipping Senator, Mr Mir Hasil Khan Bizenjo.
PRS20BN RELEASED FOR PSO TO AVOID INTERNATIONAL DEFAULTS (DAWN): After Pakistan State Oil’s (PSO) receivables touched PRs280bn, government has decided to immediately release PRs20bn for the company to help it avoid any international defaults.
ONE GAS TURBINE AT BHIKKI COMMISSIONED (THE NEWS): One of the three gas turbines of Bhikki Power Plant has started production and expected to add 385MW within a few days.
VOLKSWAGEN SET TO LAUNCH TWO NEW VEHICLES IN PAKISTAN (TRIBUNE): Volkswagen is in final talks with Premier Systems Private Ltd to set up a manufacturing/assembly plant for its Amarok and T6 models.
ECC APPROVED ANOTHER PRS30BN LOAN FOR THE POWER SECTOR (DAWN): Ministry of Water and Power said the Power Holding Company (Pvt) Ltd would be responsible for arranging a syndicated term finance certificate issue worth PRs30bn.
DIVESTMENT: MARI PETROLEUM’S STOCK OFFER TERMED OVERPRICED (TRIBUNE): Reportedly, the government’s plan to divest its shareholding in Mari Petroleum Company Limited (MPCL) may get derailed as shares it is offering to the company’s joint-venture partners are being considered overpriced.
LOCAL CAR SALES DOWN 4% IN JAN (TRIBUNE): Local automobile sales (including LCVs and jeeps) in January 2017 remained 20,844 units, down 4% compared with 21,717 units in the same month last year, according to data released by the Pakistan Automotive Manufacturers Association (PAMA).
STOCK MARKET SYNOPSIS
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