contained the
response from the investors. News flow on privatization continued to
be a major factor in play as the market continued its seesaw like
upward journey. Quarterly results expectations also added some spice
in to the market activity.
THIS
WEEK'S PERFORMANCE
The market swung wildly during the week as the
tussle between bulls and bears continued this week. On a weekly basis
however, the KSE100 index managed to register a modest rise of 0.5% to
close at 2028 level.
PSO continued to remain active on the back of
privatization news flow. The scrip attracted a total turnover of 128mn
shares for the week, slightly lower than last week's total volume of
130mn shares. Hubco and PTCL were the other two most active scrips in
the market. While PTCL's attracted attention as a result of the result
announcement at the beginning of the week, activity in Hubco can be
largely attributable to the quarterly results announcement expected
within this month.
Average daily volume during the week registered a
decline of 12% to 120mn shares this week, largely because of the mixed
sentiments prevailing in the market.
OUTLOOK
FOR THE COMING WEEK
With the elections coming up next week, we do not
expect much activity in the market. Investors are expected to remain
on the sidelines and wait for the election results. Although the
market appears attractive, we expect both bull and bears to be active,
and advise a cautious approach.
THE
DAILY DRAMA
The week was expected to start off on an exciting
note as PTCL was to announce its result on Monday. However, PTCL's
results failed to excite the market as the index registered a marginal
decline and closed at 2018.75 on Monday, down 0.29 points. Although
PTCL's profit numbers were slightly above market expectations, the
surprise element was missing as far as the dividend was concerned.
Coupled with the dividend announcement, the late book closure date led
to selling from all counters as the investors booked profits. The
change of mood in PTCL also trickled down to other stocks as investors
booked profits on all major scrips. Market activity was thus high as
the total traded volumes rose by 30% to 149mn shares.
The decline in the index continued on Tuesday as
well as the Index fell by 13 points to close at 2005.45. PTCL and PSO
led the decline in the market. While PTCL's decline was attributable
to profit booking by investors after result announcement, PSO and
other market heavy weights also came under pressure as negative news
on Kashmir elections depressed the market sentiment. The volumes
however declined by 39% to 91mn shares.
Market took a U-turn on Wednesday as the Index rose
by staggering 24 points to close the day at 2030 level. Statements on
the privatization of PSO generated substantial interest in the stock
while Shell drew investors' attention on the back of expectation of
interim results. However, Fauji Fertilizer stole the show as the scrip
rose by PkR2.50. Heavy institutional support was seen in the market as
they were unable to resist the temptation to invest with attractive
levels of market heavy weights. Market volumes also gained strength,
rising by 21% to 110mn shares.
Thursday saw majority of the last day's gains fade
away as the Index fell by 16 points to close the day at 2013 level.
The day started off with a positive note, gaining 12 points and was
almost close to breaking the 29-month high of 2043 when profit booking
by investors changed the market sentiment. News on possible delays in
some high-profile transactions attracted selling from all major
counters, which engulfed the market as a whole. The market activity
also rose to 152mn shares, up 38% from last trading day.
The Index regained Thursday's loss and gained 15
points to close the day at 2028 level. Although the market opened on a
weak note, positive news over possible increase in OMC's margins
resulted in heavy buying in Shell, which rose by almost 5% to close
the day at PkR313.50/share. Buying was also seen in other major scrips
on the back of positive expectations on quarterly result
announcements.
SECTOR
REVIEW: NATIONAL BANK OF PAKISTAN
National Bank of Pakistan (NBP) is offering 5%
shares to the public with a green shoe option of 5%, the subscription
for which will start on October 5, 2002 to October 9, 2002. This is
NBP's second public offer, the first being in November 2001. The price
fixed for the second public offering b PkR21 per share, reflecting a
7% discount from its share price of PkR22.65 on October 3, 2002. NBP
is currently trading at 0.5x its book value and with the expectation
of significant improvement in profits going forward, we recommend
subscription of the public offering.
Details of the Second Public issue
• Opening and closing date: Commencing at the
start of banking hours of October 5, 2002 and will close at the end of
banking hours on October 9, 2002;
• Price: At PkR21 per ordinary share of par value of PkR10 per
share;
• Purpose of the issue: Privatization and broadening the ownership
of the bank.
COMPARISON
AND RECOMMENDATION
For the purpose of analysis, we have compared NBP
with Muslim Commercial Bank the only other bank in the Big 5, which is
publicly traded.
NBP is currently trading at 0.5x its book value
while MCB is trading at par to its book value. This valuation alone
makes a considerably strong case for our Buy recommendation.
Furthermore, we believe that the Pre Provision Profits (PPP) of NBP
will increase in the future as the bank has already amortized most of
the costs associated with the VHS scheme. Consequently, we believe
that both P/PPP and P/E ratios of NBP are likely to improve in the
future.
With the stock currently trading at a discount of
approximately 7% from its market value, we believe that the
subscribers to the public offering will be able to earn higher returns
from the future developments in NBP.
MARKET ROUNDUP |
| .. |
LAST WEEK |
THIS WEEK |
% CHANGE |
|
Mkt. Cap (US $ bn) |
7.83 |
7.87 |
0.51 |
|
Total Turnover (mn shares) |
684.89 |
600.29 |
-12.35 |
|
Value Traded (US$ mn.) |
668.68 |
648.03 |
-3.09 |
|
No. of Trading Sessions |
5 |
5 |
|
|
Avg. Dly T/O (mn. Shares) |
136.98 |
120.06 |
-12.35 |
|
Avg. Dly T/O (US$ mn) |
133.74 |
129.61 |
-3.09 |
|
KSE 100 Index |
2019.04 |
2028.39 |
0.46 |
|
KSE All Shares Index |
1259.71 |
1264.51 |
0.38 |
