LAHORE  - The market remained flat and closed at 26,682 level and slight uptick in participation was seen as the average daily volumes rose by 4% to Rs6.8 billion during 4 working days of the week. Low inflation (CPI) figure of 7.91% for the month of January remained the main highlight of the week coupled with investors expecting that further rate hike won’t take place in the upcoming MSP. Moreover, positive results from CHCC and EFERT also kept investors interested in these scrips. During the week interest was seen in JSCL, ANL, BOP, BOPR1 and BIPL amongst others.
Experts said that the local bourse initially showed a positive trend this week as fears of foreign selling subsided somewhat, while a softer CPI reading for January (at 7.9%) also boosted market sentiment. However, lack of positive earnings surprises in the result season and uncertainty on the fate of ongoing talks with the Taliban in the country weighted on the mind of investors leading market participants to book profits. Consequently, the benchmark KSE-100 index slipped by 0.4%WoW this week to close at the 26,682 level. Weak sentiment also reflected in the market liquidity as average volumes traded during the week dipped by 5.3%WoW (284mn shares). Key news flow during the week included 1) cement sales rising by 3%YoY in January 2014, 2) Foreign exchange reserves increasing by US$23.5mn to US$8.02bn and 3) discussion in government quarters for deregulating the margin of Oil Marketing Companies (OMCs). Meanwhile, below are the key result announcements during the week:
In 2013 the urea industry grew by 13% after the downturn in 2012 (5,900K tons in 2013 versus 5,230 K tons in 2012). This growth was mainly attributable to better economics on major crops; weather conditions also remained favorable, casting a positive impact on demand.  Increase in off take is also a result of restoration of channel confidence at retail and trade level.
The government also played an important role by improving gas allocation to the industry. Local production increased by 17%, as a result of which, the Government managed to reduce the subsidy on imported urea. The prices of locally produced urea remained fairly stable throughout the year. Average price of domestic urea during the year increased by 3.8% only (1% was due to sales tax changes) versus overall inflation of 9%. Sales revenue for 2013 was Rs. 50,129 million which was higher by 64% as compared to the corresponding period (2012: Rs. 30,627 million).  According to experts, the year 2013 was a turnaround year for Engro Fertilizers Limited. The Company managed to return back to profitability after incurring a loss in 2012 and in the process, achieved its highest ever revenue. The sound financial performance was on the back of highest ever production and sales of 1,562 k tons and 1,570 k tons respectively. With improved profitability, the Company decided to go for an IPO, which was a huge success as it was oversubscribed by 4 times.  For 2014, likely recovery in banking spreads after recent monetary tightening, better private sector credit appetite and falling non-performing loans (NPLs) are expected to increase Topline banking universe profits by 21%. Deposit growth of 12.7% in 2013 is much in line with 2012 growth of 13.8%. However, advances and investment growth rates declined in 2013 as banks utilized about Rs360bn to pay their borrowings. Thus deposit plus borrowing grew by 6.3% in 2013. Comparing with the longer-term history, deposit growth in 2013 is broadly in line with 5-year average deposit growth of 13.5% but lower than 16% average growth in last 10 years
In 2013 banks’ advances and loans inched up by only 5.6% to Rs4.1tn while investment increased by 4.6% to Rs4.1tn. Similarly, advances and investments growth also remained lower than the historical averages. In last 5 years, advance and investments have increased at an average annual rate of 8% and 30%, respectively. On the other hand, banks’ repurchase agreement borrowings declined by 35.5% to Rs655bn in 2013.