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_: MARKET THIS WEEK
The market started the week on a negative note, but picked up steam subsequently. Though the kse-100 closed 130 points up (+1.05% wow), selling was witnessed from foreign investors as reflected in the fus outflow of US$22. 3mn (versus US$2. 3mn inflow last week), volumes showed recovery of +112% wow, as investors geared up for the corporate result season, where interest remains skewed towards payout-heavy stocks. Market performance was encouragingly broad based on the back of assorted positive news flow (firmer international oil prices,
Increase in cement and fertilizer prices, rumors of fsv relaxation for banks etc). On the macro front while a current account surplus of US$0. 54bn in FYlI was a positive, the 2.3% yoy contraction in LSM during May -11 was a dampener. we have raised our crude price assumption this week by 15% to US$106. 6/bbl and now expect stronger earnings growth for e&ps in fy12 (38%) but same is likely to exert upward pressure on both inflation and currency parity.
OUTLOOK FOR THE FUTURE
As the corporate result gathers steam next week, we believe, interest will build-up in stock specific activities with more interest in banking and Fertilizer companies as key companies of the said sectors are to announce their results next week. Meanwhile, we advise investors watch for any news flow on expected meeting between government and the imf. on macro front, the central bank will announce the monetary policy on 30th July whereby status quo on the policy rate is largely expected, we reiterate that correction in fundamentally strong stocks should serve as an accumulation opportunity and our preferred list currently includes POL, PPL, PSO, OGDC, FFC, Kapco, PTCL and Lucky.
NEWS THIS WEEK
CASH STRAPPED PSO SENDS SOS
As per news reports, payables of Pakistan state Oil have increased to PRsl59bn, requiring an immediate injection of PRs45bn to avoid default, interestingly, PSO's receivables are still at PRsl37bn implying pick-up in payables is primarily from purchases, in the last few weeks, PSO receivables have remained...