October 15, 2001	Monday	Rajab 27, 1422

THE KSE 100-share index narrowly missed the coveted level of 1,200 point during the preceding week but indications are that it could rule above the next psychological barrier thanks to the presence of strong foreign fund and local buying.

The financial scenario may not have changed as the local unrest and the intensive US air raids on Afghanistan could alter the prevailing status quo, as far as the stock trading is concerned the nearby outlook appears firm.

The KSE 100-share index, however, posted a good gain of 52.45 points or about four per cent over the week at 1,193.65 as compared to 1,141.20 a week earlier, lifting the market capitalization to Rs298 billion from the previous week’s Rs280 billion. The market, therefore emitted bullish sparks reminiscent of a sustained bull-run boosted essentially by hereto shy foreign fund buying judiciously assisted by the local institutional traders but the local civil unrest raised doubts about the future outlook.

The fears about the aftermath of Afghan war are there but the tired investors are not inclined to lay their guards on the perception of a robust economy after the reopening of floodgate of foreign credit lines. The fact that the KSE 100-share index on Tuesday soared by 6.40 per cent and the daily volume touched the high mark of 200 million shares from the previous average of 40 million signalled a major change in the market psychology and a message for those who could invest at the current bottom rates.

The lifting of sanctions, rescheduling of foreign loans, release of stuck-up credit line and the hopes of direct foreign investment did not allow investors to leave the arena. What seems to have reinforced the investor-perception of bull-run was the feeler about the write off in part of the huge foreign debt of $32 billion in the Washington meeting, being attended by finance minister.

Volume figure jumped to a record level of 200 million shares as the scramble for choice scrips was further intensified and it appeared pretty hard to get few of them amid market talk of shrinking floating stock. However, Tuesday’s 71-point rise in the KSE 100-share index at 1,173.53 was not that big but viewed in the backdrop of war scenario, it is massive and speaks of the courage of conviction of those who initiated the run-up in a terribly bearish external outlook. The market capitalization rose by a hefty figure of Rs15 billion at Rs293 billion. The KSE 100-share index had shown an all-time single session gain of 133.49 points on June 3, 1998; 126.93 points on June 26,1998; 90.18 points prior to these records and several others in between. An idea of strong speculative buying may well be had from the fact that the emergency clearings were ordered in three out of the 12 forward shares as their prices have risen by limit-gain of Rs1.50 in a session and the trading was temporarily suspended to allow the settlement of the outstanding dues. The buying spree seeks to bring home the fact that there is no looking back war or no war, one broker said. The rally led by foreign funds and local financial institutions was reminiscent of boom conditions of the mid-90s and analysts at the W.E. Financials predicts it could be sustained as most of the basic fundamentals have already undergone a major change on the positive side.

Although all leading shares, notably the PTCL, the PSO, the Hubco, Fauji Fertiliser and the Engro Chemical and several others showed gains across the board, taking in their wings most of the second-liners, heralding the advent of a sustained bull-run. A section of leading brokers was sceptical about the rally that came in the backdrop of the attack on Afghanistan. “The rally may be an inspired one, a bid to demonstrate that the market has discounted the Afghan factor”, says a leading broker adding “its timing, unprecedented boost in share values, massive volume don’t quite fit in the war scenario and the local civil unrest”.

No one could dispute the fact that the economy will certainly gain the needed push in the months to come if the foreign credit lines were not choked but what is the guarantee that the present political line up could prove lasting after the war ends, some other asks. But the presence of foreign funds and that too, in a big way indicate that most of them may “not be fools to take long stakes”, they add.

Plus signs dominated the list as most of the leading shares virtually raced towards their pre-reaction levels under the lead of Al-Ghazi Tractors, Shell Pakistan, Engro Chemical, the PSO, Pakistan Oilfields, the BOC and Lever Brothers, which recovered Rs4 to 39 each. Other good gainers were led by the Orix Leasing after a good cash dividend of 25 per cent plus bonus shares of 20 per cent, Adamjee Insurance, Kohinoor Weaving, Cherat Cement, Dawood Hercules, Fauji Fertiliser, the ICI Pakistan, Knoll Pharma and Tri-Pack Films, the Nestle MilkPak and several others.

Trading volume soared to about 700 million shares from the previous meagre figure of 200 million shares as the PTCL and the Hub-Power were actively traded in each session throughout the last week. Other actives were led by the Fauji Fertiliser, the ICI Pakistan, Engro Chemical, Adadmjee Insurance, Nishat Mill, the MCB, Sui Northern, Dewan Salman, WorldCall Payphones and several others, together accounting for 40 per cent of the total figure. —Muhammad Aslam