MARKET THIS WEEK
This week KSE-100 index remained under pressure,
owing to the future contract settlement issue. On Monday, market
continued its bearish spell and declined by another 255 points.
Financial institutions assurance to provide fund for settlement of
futures contract also failed to change the bearish trend. However,
on Tuesday market staged a healthy recovery after a consortium of
institutions agreed to buy substantial quantity of OGDC shares
@PkR117.50 per share. This announcement pulled the other scrip's to
On Wednesday, investors availed the opportunity
to buy stocks which had come down to attractive levels which has
helped the index to move up. On Thursday, the market could not
sustain its brief bullish spell and collapsed over rumors of changes
in future contract rules and remained under pressure on Friday. In
sum KSE-100 index lost 368 points over last week.
for the Future
In our opinion, the market will remain range
bound next week. OGDCL would continue to exert pressure on the
index. We advise our client to keep limited exposure and trade only
on a strict stop loss basis. However, individual stock valuations
have become attractive. Our top picks for next week are HUBCO, FFC,
The major developments this week were:
•The State Bank of Pakistan (SBP) rejected all
bids for PIB auction held on Mar-26.
•The continuous fall in stock market and the
pressure to settle their long-term positions is reportedly forcing
investors to liquidate their real estate holdings.
•The government is likely to delay complete
handover of Karachi Electric Supply Corporation (KESC) to Kanooz
group of Saudi Arabia.
•As a result of winter rain received, Pakistan
is expected to have a massive 121.9 million-acre feet (MAF) of water
at its disposal in the forth-coming Kharif crop season
•ADB offers Political risk guarantee to foreign
•Kalabagh Dam not included in 5-year Water
•China Mobile Expresses interest in PTCL.
•Al Kanooz seeks government guarantees for KESC.
•Engro seeking gas allocation for 50k tons
•State Bank of Pakistan (SBP) to increase the
benchmark 6-M T-bill yield by 48bps to 5.69%.
•SSGC seeks PkR10/unit increase in tariffs.
•India resolute on gas pipeline issue.
•CBR raises PkR2.16bn through CVT &
•International oil keeps up phenomenal surge.
•Domestic oil prices remain unchanged.
•CBR surpassed its first 9-M revenue target,
tariff liberalization and revenue collection
•Pakistan's revenue collection has been
impressive and broad based in first 9-M of current fiscal year,
owing to the trade liberalization reforms taken place in the last
•Looking ahead, the growth in revenue
collection is likely to continue. As the domestic demand is peaking,
owing to the sound GDP growth of 7.2-7.4% expected in FY05.
•Sustained growth in revenue collection should
encourage (1) GoP to further liberalize the duty structure in FY06
budget (2) to increase PSDP in years to follow.
TAX REVENUES — BROAD-BASED COLLECTION
Despite the broad based reduction in tariff
structure. We believe that the revenue collection in the first 9-M