KARACHI, March 20: The US attack on Iraq seems to have given a green signal to the investors who on Thursday indulged in speculative buying amid hopes that the war may be short and result-oriented but analysts warned them to play safe and not ride the bandwagon on false assumptions.

The market’s buoyant response to an end of the uncertainty over Iraq is also well-reflected in the steep rise in the KSE 100-share index, which soared 3.36 per cent or 84.17 points at 2,590.39 adding Rs17bn to the market capitalization at Rs584bn.

The initial reaction, however, demonstrates that the market seemed to have discounted the possible negative fallout of the US attack on Iraq on the local economy but those who could foresee the ravages of war say the situation is fraught with high financial risks and needs objective analysis.

“The uncertainty over the Iraq situation was over after the US air attacks on Iraq,” leading stock analysts commenting on the market’s outstanding performance said. “The perception that the end will be quick induced punters and speculative traders to cover positions at the prevailing lower levels.”

However, it appears to be an initial thinking on the outcome of Iraq war and is essentially influenced by the rallies on the European and Asian markets. However, despite heavy odds against Iraq the end may not be that swift and according to the US calculations.

“Iraq seems to be in a defensive mood and how it will respond to the US air attacks in the coming days will set the future course of war and its impact on the foreign trade,” brokers said. “There is, therefore, a need to be a bit cautious before jumping to conclusions.”

Bulk of the support originated from the cash-heavy financial institutions and institutional traders but general investors thought twice before riding the bandwagon, a leading stock analyst said.

“I still believe the snap rally could be deceptive as it is not backed by the objective conditions,” another analyst said adding. “In war situations set targets are seldom achieved as anything could happen in-between.” Moreover, the sharp increase in the index did not reflect the performance of the broader market.

Both the PTCL and the Hub-Power, which together hold a weightage of 43 per cent in the index have risen by Rs2.50 and added about 50 points to it alone followed by PSO. An increase of one rupee in their prices adds 16 points to the index.

There is a loud whispering in the corridors of the KSE that some big ones are trapped in the phenomenon of overbought positions on selected counters at the inflated levels and are trying to get out of the impasse after pushing prices higher.

Nobody could deny the fact that there is a lot of surplus liquidity around owing to lower carryover business and dividend yields are attractive enough to replough idle money but if the Iraq war takes a negative turn, its impact on the world economies may not be that easy to absorb.

Leading index shares, notably in the energy sector and some textile scrips as well as MNCs led the market advance as investors covered positions in them at the lower levels.

Shell Pakistan, Shell Gas, Unilever Pakistan, Dawood Hercules and Siemens Pakistan were leading among the gainers, posting gains ranging from Rs7 to Rs19. Other good gainers were led by 4th ICP, Adamjee Insurance, Bhanero Textiles, Blessed Textiles, Faisal Spinning, National Refinery, Pakistan Oilfields, General Tyre, Honda Atlas, Fauji Fertilizer and Packages, up Rs2 to Rs6.05.

Losers were led by Pak-Suzuki Motors, after the announcement of below market expectations dividend of 30 per cent, Shezan International, IGI Insurance, Noon Sugar and Javed Omer were leading among the losers, off Rs1.70 to Rs3.90.

Trading volume rose to 181m shares from the previous 99m shares as advancing shares forced a strong lead over the losing ones at 147 to 55, with 51 shares holding on to the last levels.

PTCL topped the list of actives, higher by Rs1.60 at Rs23.05 on 53m shares followed by Hub-Power, up 90 paisa at Rs36.30 on 38m shares, Sui Northern Gas, higher by 80 paisa at Rs23.60 on 24m shares, FFC-Jordan Fertilizer, firm by 65 paisa at Rs11 on 16m shares, PSO, higher Rs6.90 at Rs200.50 on 12m shares, MCB, up Rs1.15 at Rs31.10 on 13m shares and National Bank, steady by 45 paisa at Rs25.90 on 3m shares.

Other actives were led by Dewan Salman, up 40 paisa on 3m shares, Pak PTA, firm by 25 paisa also on 3m shares and ICI Pakistan, higher Rs1.85 on 2m shares.

FORWARD COUNTER: PTCL came in for active short-covering at the lower levels and rose by Rs1.40 at Rs22.95 on 12m shares followed by Hub-Power, up Rs1.05 at Rs36.35 on 10m shares and PSO, sharply higher by Rs6.35 at Rs200.75 on 6m shares. Sui Northern Gas rose by Rs90 paisa at Rs23.60 on 3m shares and FFC-Jordan Fertilizer was marked up by 65 paisa at Rs11 on 2m shares.