Haughty conditions prevailed on the stock market last week due to the judicious blend of local and foreign buying, with selected counters not letting investors take, even a technical breather. New weekly records, both in terms of massive increase in the market capitalization and the index, were established.

But never before in the KSE history had the market capitalization soared by Rs41 billion in a single session. The new record reflects the price flare-up in some of the pivotals, notably the PSO, which closed around the circuit breaker on strong speculative foreign-buying ahead of its board meeting.

The current price flare-up and the rising volume reflects that all roads are leading to the stock market, but whether or not, these could be sustained is a question being debated in informed quarters. Some say it could be deceptive, while others claim the political stand-off is genuine and reflects deeper foreign support in local stock trading for reasons best known to them.

The KSE 100-share index continued its march beyond the coveted level of 2,200 points on speculative buying, fuelled by higher quarterly earnings and strong selective foreign support, which did not allow investors to look back at inventories before inflating their investment portfolios.

The index level of 2,237 points, reflects a rise of Rs59 billion in the market capitalization at Rs519 billion, and 126 points or 8 per cent increase in the KSE 100-share index over the week, while the single session volume figure soared to 400m shares. However, both figures are well below the all-time records of Rs610 billion and 2,661 points established during the mid 90s boom.

“I could not precisely decide how to interpret the current exalted conditions, as in the absence of matching positive fundamentals it could be speculative and deceptive in the final analysis”, says a leading analyst.

“I fear there could be a long list of massive causalities after the market decides to meet its technical demands”, some others say adding, “the interim working results coming from some mega companies are fairly encouraging but the market has soared beyond them”.

Who is indulging in speculative trading or why it is easy to fathom, is not in the interest of small investors or savers most of whom could be ultimate losers, they add.

The market’s credible performance is, however, not backed by ground realities, in the backdrop of post-election stand-off among the winning parties to form a government at the centre or the financial uncertainties associated with the policies of the new government.

“The current sustained run-up is reminiscent of mid-90s boom which was based on some positive corporate factors, including the financial policies followed by a massive number of new flotations and portfolio investment”, brokers say adding “the current price flare-up has none of those stimulants — barring rise in forex reserves and higher remittance — not too many new issues”.

The turnover figure of 300m shares in a single session is billed as the highest so far under the newly introduced trading system known as the “undisclosed system”, which does not specify the names of buyers and sellers of trades, eliminating the “herd culture” in stock trading.

“The current week is very crucial for future direction of the market as quarterly board meetings of a dozen leading companies, including the MNCs are to be held by Oct 31”, stock analysts say. “A loud whispering about good interims by most of them continue to inspire strong speculative buyings”.

The board meetings of the PTCL, the PIAC, the Glaxo-Wellcome Pakistan, the Sui Northern Gas, the SK&F, the Reckitt and Benckiser and some others are due before Oct 31.

The KSE 100-share index rose further by 26.78 points at 2,168.82 points, signalling it could take a technical breather after having hit its next target of 2,200 points. The market capitalization soared by 5.484 billion at Rs491.605 billion.

“The current sustained run-up reflects a major change in investor-perception”, analysts say adding “the massive covering purchases are guided by positive market fundamentals rather than the political uncertainty”.

It is interesting to note the failure of leading parties so far to form a stable coalition government at the centre after intensive parleys. All this could not curb the investors’ enthusiasm to build long positions on the counters where chances of capital gains are more bright.

“ I don’t rule out the possibility of strong fund-buying on selected counters”, says a broker, “the steep increase in volume reflects they are in the market in a big way and for good reasons”.

This signals the end of post-election apprehensions of foreign investors but on what grounds, is unclear, he adds.

The bulk of support remained confined to the PTCL, the Hub-Power and the PSO, which together accounted for more than half of the total volume as investors were not inclined to miss the Oct 31 deadline.

The Pakistan Reinsurance Company and the Grays of Cambridge were leading among the gainers, followed by the Lakson Tobacco, the Fazal Textiles, the Rafhan Bestfoods, the Shell Gas, the HinoPak Motors, the Indus Motors, the Pak-Suzuki Motors, the PSO, Javed Omer Sapphire Fibre, the Al-Ghazi Tractors, the ICI Pakistan, the Unilever Pakistan, and many others.

Losers were led by the Siemens Pakistan, the Noon Pakistan, the BOC Pakistan and some others, although on-balance they managed to finish higher.

Trading volume soared over a billion shares after several months at 1.232 billion shares thanks to massive activities in the Hub-Power,the PSO, the PTCL, and several others including the Engro Chemical, the ICI Pakistan, the Sui Northern, the Nishat Mills, the KESC, Dewan Salman, the MCB and the FFC-Jordan Fertiliser and the Fauji Fertiliser.

FORWARD COUNTER: Speculative issues on the forward counter also rose under the lead of the PSO followed by the Hub-Power, the PTCL, the Engro Chemicals, the MCB and Nishat Mills on strong support throughout the week.—Muhammad Aslam