August 11, 2003	Monday	Jumadi-us-Sani 12, 1424

Stocks witnessed an unprecedented price flare-up last week due to the investors’ reluctance to take a technical breather as none among the leading ones was inclined to miss the rising market and an attractive bait of quick gains.

No one could precisely predict where the end will come to the current buying euphoria, as all predictions, since the 3,000 point index level, did not prove correct.

Massive surplus funds from the financial sector are claimed to be the chief inspiring force behind the market’s current meteoric rise. Lower bank rates, higher corporate earnings and hopes of an end to the political impasse are said to be the contributing factors in fuelling the current bull-run.

All previous records both in terms of single-session volume and index level were bettered on the Karachi Stock Exchange last week on massive foreign and local buying in most of the pivotals triggered by the perception of return of sanity to local political scenario.

The KSE 100-share index breached through three barriers of 4,100, 4,200 and 4,300 by standing firm at 4,322.93 points, while the single-session volume figure swelled to an all-time record high of 961 million shares, only short 39 million shares of the coveted mark of one billion shares.

The net increase in the index was of the order of 303.41 points or about 9 per cent, a massive rise judged by any standard.

The total market capitalization also ended at its career-best level of Rs958.396 billion as compared to Rs894.244 billion, up Rs64.152 billion, reflecting a steep increase in the share values of heavily-capitalized stakes such as the PTCL, the Hub-Power and the PSO.

Reports of a possible deal between the MMA and the government on the LFO issue, and the announcement of the final bidding date for the sell-off of controlling shares of the oil giant PSO were behind the current unprecedented price flare-up, aided partly by the advent of foreign buying in the PTCL and the Hub-Power.

What seems to have added new dimension to stock trading were reports of the advent of foreign buying in the PTCL and the Hub-Power followed by strong local institutional buying, allowing the pivotals to set new record in terms of single-session individual turnover.

The advent of foreign buying on selected counters, higher corporate news, and lower bank rates are some of the positive factors fuelling the current price flare-up, brokers said.

The market capitalization swelled to a record figure of Rs967.150 billion or about $18 billion, only short of $2 billion of the crucial total of $20 billion. This claimed to be the level by some analysts at which foreign funds made debut on the world bourses, as it gives the needed depth to the market according to their foreign portfolio investment.

The KSE may be striving to hit this target as its persistent rise of over 60 per cent in the last few months reflects and may pave the way for a massive foreign fund inflow in pivotals during the next couple of weeks, hopes a local fund manager.

The trading volume soared to its second best single-session total of 961 million shares, the highest-ever figure so far was achieved in December last year at 689 million shares. All the current volume leaders participated in an impressive figure.

But the credit for massive total goes to the PTCL and the Hub-Power, both massively traded on heavy buying ahead of the Hub-Power’s board meeting and the announcement of the 20 per cent final dividend. It was judiciously supported by the PSO.

Analysts said the mid-week selling in most of the pivotals should herald the setting in of technical correction but heavy buying in the Hub-Power and the PSO, the two leading base shares after the PTCL averted a major shake-out.

“Heavy carryover business warrants a technical adjustment tomorrow to allow the market to shed its extra weight, which in turn could pave the way for renewed buying”, they said adding, “the near-term index outlook appears to be around 4,200 points”.

They base their assessment on the expected dividend announcements from some of the leading companies, fixation of the final bidding date for the sell-off the controlling shares of the PSO to one of the three short-listed strategic buyers, and a possible deal on the LFO between the government and the opposition.

“Conflicting reports earlier about a possible deal between the MMA and the government are keeping the investors alert all the time as it could make or break the market’s current meteoric rise”, some others fear.

The market has risen by 7.5 per cent alone last week and if big ones decide to take home the windfall there could be a big shakeout, they said.

Although all are united over the future bullish market outlook beyond the 4,500 index level but in-between it needs a correction being in a highly overbought position”, brokers said.

There is a loud whispering in the rings that leading bulls could take a breather after pushing the index to 4,500-point level, irrespective of the background news on the political front alone on the strength of corporate news, they added.

Strong buying in the Hub-Power, the PSO, the Pakistan Oilfields, the Shell Pakistan, Adamjee Insurance boosted the market sentiment, while other pivotals including Dewan Salman, the KESC, Bosicor Pakistan and the PTCL came in for selling and ended lower.

Leading gainers, which were sharply higher were led by the Pakistan Reinsurance Co, Javed Omer, Atlas Battery, Atlas Honda, Pakistan Services, the AKD Securities, the PSO, Pakistan Oilfields, Packages, the PSO, the Shell Pakistan, the Hub-Power, the PTCL and the Wyeth Pakistan.

Prominent losers were led by Island Textiles, followed by the National Refinery, the Sapphire Textiles, the New Jubilee Insurance, the EFU Life, Lakson Tobacco, Aventis Pharma and many others.

Trading volume also broker all previous at 3.661 billion shares, bulk of which went to the credit of the PTCL and the Hub-Power followed by the PSO, the FFC-Jordan Fertiliser, the PIA, Sui Northern Gas, Fauji Cement, Pakistan Oilfield, Bosicor Pakistan, Lucky Maple Leaf and the D.G.Khan Cement, Japan Power and many others.

FORWARD COUNTER: Forward counter also gave a credible performance under the lead of the PSO, the Hub-Power, the PTCL, the FFC-Jordan Fertiliser and the Sui Northern Gas and ended with good gains in sympathy to the counterparts in the ready section amid large volume.—Muhammad Aslam