KARACHI, June 30: The Karachi stock market moved into tenth consecutive week of upward movement of shares. But the increase in KSE-100 index on Monday was a minor 2.40 points.

Since the gain was smaller than the marginal rise of 3.47 points on the last trading session on Friday, many market players wondered whether the trend suggested that the long over-due technical correction was around the corner.

The annualised badla rates on the KSE had peaked to 16.3 per cent last Friday and the combined (Karachi & Lahore) COT investment stood at a high Rs16.2 billion, which analysts thought were signs of distress. Analysts said that aside from badla indicators, technical ratios also pointed to the fact that equity market had become highly overbought.

On the positive side, the increasing liquidity; falling interest rates and the expected downward revision in NSS rates due on Monday, enabled bulls to keep going north. But bears were just beginning to get out of hibernation with some analysts arguing that Pakistan should have asked US for more than the $3 billion package over five-year period. The internal political situation also was said to warrant caution.

But the major worry on the minds of many stock strategists was in respect of continuing rally in second and third tier stocks: “While we maintain our long-term bull call owing to cheaper valuations of the market pivotals, the surprisingly higher valuations of the second and third tier stocks are forcing us to remain cautious on the market,” said Arshad Arif, head of research at KASB. Analyst at Taurus Securities observed that second-tier stocks had become “overheated” and blue chips were becoming relatively undervalued. “In order for the rally to continue, blue chips need to catch up to avoid a major correction,” they said. Khalid Iqbal Siddiqui, analyst at InvestCap also cautioned: “Some of the second-tiers have reached inflated levels.”

The heavyweight Hubco, had posted a massive volume of 153 shares and a gain of 75 paisa on Friday after underperforming the market in all of June. During the month, Hubco had risen only 7 per cent compared with the KSE-100 surge by 9.7 per cent or 300 points. But the rally in the country’s biggest Independent Power Plant (IPP) proved short-lived as its stock shed 30 paisa on Monday with volume trimmed to just 59 million shares. PTCL and PSO also presented disappointing performance, though market was looking at the three top tier stocks to give direction to the market.

The KSE-100 index closed higher by 2.40 points on Monday, at 3402.48 points. The cement sector, which had made a massive gain of 47.4 per cent in June, came in for some profit selling, with most scrips shedding some weight except for DG Khan Cement, which gained Rs1.60 to close at Rs30.85 on a volume of 53 million shares. On the back of incentives announced in the latest budget, cement stocks had rallied all round with major gains noted in Maple Leaf, Chakwal, DG Khan and Lucky Cement.

Gaining scrips were led by Rafhan Maize Products, which rose by Rs29 to close at Rs417, but on a small turnover of 400 shares. The fast moving consumer goods (FMCG) giant, Unilever, gained Rs25 to Rs1,325 with business in 6,160 shares. Other advancing stocks were Atlas Battery up by Rs6 to Rs86 on 9,600 shares; Arif Habib Securities higher by Rs17 on 1000 shares; J.O.V & Co up by Rs16.70 on 44,000 shares; ICP SEMF up by Rs2.55 on 5.4 million shares and Diamond Industries getting stronger by Rs1.50 on 27,000 shares.

Retreating shares were led by Siemens Engineering, which dropped by Rs15.05 to Rs350 on 1,500 shares. The tightly-held Fateh Textile shed Rs5 to close at Rs300 without any share changing hands.

Trading volume fell steeply to 295 million shares, compared with 482 million shares on the last session. Losers which numbered 192, forced a lead over 178 gainers, with 52 shares holding on to their last levels.

The most active list was topped by Hub Power Company, followed by DG Khan Cement. PTCL saw volume of 191 million shares with the stock losing 15 paisa to close at Rs28.40. PSO lost 65 paisa to close at Rs228.10 on a business in 9 million shares.

Other actives included Maple Leaf Cement with volume of 147 million shares, down by 10 paisa to Rs15.45; Bosicor Pakistan, lower by 40 paisa to Rs21.25 on 13 million shares; Lucky Cement closed 95 paisa lower at Rs18 on 10 million shares.

FORWARD COUNTER: Stocks under the future contract were mostly down with Hubco off 16 paisa to Rs38.25 on a turnover of 8 million shares; PSO lower by Re1 to end at Rs230.50 on 3 million shares and PTCL shedding 15 paisa to close at Rs28.65 on 2.7 million shares.