AKD Quotidian about — Pakistan Market: Banks and OMCs on top!

Karachi, April 08, 2014 (PPI-OT): After touching its recent trough of 25.478.9 points. the Index has rallied by 3,100 points to close In at 28.578.9 level, translating into 12% return (20% En US$ terms during past 28 trading sessions.

According to AKD Securities, They believe this bull Run was majority supported by 1) Extraordinary foreign flows, primarily dictated by more than 100% increase In Pakistan weights in MSCI FM 100 Index in the upcoming Semi Annual l Review during the aforementioned period, market attracted foreign funds worth US$40.6mn). 2) Macroeconomic Improvement, which saw Pakistan’s forex reserves crossing The much coveted US$10bn mark3) Progress in peace talks with the TTP and 4) The GoP opting to be re –profile its debts, going into longer maturities highlighted by PKR974 bn raised through PIBs in 1QCY2014 against the target of PKR 180bn . with the latter vigour to the banking sector (-24% weight in the kSE-100 index)-the sector posited returns of 21% having 36% share in aforementioned growth witnessed by the KSE-100 index – this was followed by oil marketing Cos- (OMCs)which posed 33% returns and had 10 % contribution in the index .The laggards remained Chemical ,Power and Textile sectors , having cumulative weight of 22.6%.

Which sectors performed As mentioned above. banking sector led the line as far as contribution in index growth concerned : this was followed by10% contribution from OMCs despite having average weight of 4.15 % in the KSE -100 index. Similar was the performance another relatively low weight (6.4%) sector as consumer sector contribution was recorded at 8% while Cement sector had 6 % share with similar weight –E&Ps . on the other hand did have 12% contribution ,however, this looks a bit low keeping in mind that E&Ps have a weight 22.6% in the benchmark KSE-100 – AKD Securities believes this lethargic performance is down to poor showing by the sector ‘s heavy weight . OGDC ,Negatively impacted but swift acceleration of PKR vs US$ ,Refineries and Textiles remained worse performing sectors in the aforementioned rally.

Non –performers within the performing sectors : Banking sector remained the top performance in 3,100 points rally(+12%) that market has recently gone through. However with in banking sector ,there are certain stock that are yet to follow suit, these include NBP ( 8% return), and MEBL (5% return). Similar has been the tale for E&P sector ,where OGDC with 2% return remained laggard. As for cement sector ,MLCF,KOHC CHC and DGKC failed to chemical sector, both the Fauji have so far failed to catch up , with 7% return provided by the sector .

Investment perspective: Despite the recent rally ,sectors like E and P, power, Textile and chemicals are yet to pick up, it cumulative weight of roughly 46% in the KSE-100 , AKD Securities believes these will be sectors that will take the market to AKD Securities’ Jun-14 index target of 29,800 points ,In addition to these sectors , one cam also look into particular underperforming scraps within the sector one can also look into particular underperforming scraps with in the sector that has delivered staler performance in the above –mentioned rally. These scraps include NBP,FFBL,FFC,ENGRO,NML,KAPCO and OGDC among st others-

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