05 January 2004	Monday	12 Ziqa'ad 1424

Karachi stocks maintained an upward drive by finishing the outgoing year 2003's account on a high note. However, the new year debut was not very encouraging, despite President Musharraf winning the vote of confidence.

Though, the KSE 100-share index failed in holding on beyond the 4,500-point level, yet it closed the year with a fresh rise of about 81 points at 4,474. This added Rs19 billion to the market capital at Rs954 billion.

The new year's start was a bit slow, as both the financial traders and leading investors were in the process of planning market operations for the new year.

Another half a per cent cut in the interest rates on all National Saving Schemes from January 1, may allow an outflow of modest amounts from here to share business in coming weeks, most analysts predicted, adding, "investors want a fair return on their investment".

The vote of confidence in favour of President, by both the houses, sans opposition, failed to boost the trading on the bourse. A higher carryover volume in some mega issues, including the PSO prompted a lot of selling from the retailers.

The market's sentiment was also influenced, though bearishly, after the new prudential rules, aiming at curtailing operations of the DFIs and banks and in share market, became effective from January 1, 2004.

Under these rules, stipulated to improve the risk management in share market, the DFIs and banks are not allowed to make investment in shares by more than 20 and 35 per cent of their equity.

The recent cut in the NSSs' interest rates - thrice since last July - is expected to generate lot of new buying in the shares after the investors have evaluated and compared rates of return on their investments in shares and saving schemes. The perception of a massive outflow appears a remote possibility, owing to the safety of investment associated with official schemes. However, the new account could become positive in due course soon after the investors have reevaluated post-vote political scenario, including the continuity in economic and financial policies.

Nevertheless, some analysts fear a negative fallout of trust vote in the absence of the MMA and opposition in weeks to come - if any resorts to agitation.

The post-vote market reaction was not so aggressive as was being speculated on the loss of 50 points from the share index, though risen by the same number, later the same day.

The KSE 100-share index finally finished the week with a fresh rise of 80.89 points at 4,473.93, after breaching the barrier of 4,500 points at one stage.

Earlier, the market wrapped up 2003's account on a positive note, although it had witnessed many instances wherein, the index level and market capital were battered. Furthermore, some new records were established as investors were out to grab the floating stock and that too, for good reasons.

Though, both the index and market capital finished the year well below their all-time best level, but these, in more than one ways, demonstrated that the new year debut could be more powerful on the strength of expected political harmony, higher corporate earnings and steady pace of privatization of the state-owned units.

The Engro Chemical came in for strong buying support, followed by the market talk of an interim and rose by 4.95 at Rs92.80. Some other pivotals, including the PSO, the Pakistan Oilfields also attracted good support and rose in unison.

Trading volume was relatively slow as the brokerage houses remained busy in year-end portfolio adjustments, rather than opting for new year buying.

During the year, the KSE 100-share index hit its all-time peak level at 4,604 points and the market capital at Rs1,021 billion - net increase in two by 70 per cent.

The market's spectacular performance - over the year which has passed into history - has earned a coveted title of, "the best performing bourse in the world". There is a relative calm on the developing political scenario.

"Opposition's voice of dissent - including the MMA now a major component of opposition and in the government too, - has been considerably weakened, making things more smooth for the government",

On the privatization front, the sale of Habib Bank is expected to hasten the process of other mega units, including the PSO, during the new year.

"Investors are eying the index level of 5,000 points during the first quarter, with positive indicators of achieving the target, as too much has changed on the political and corporate front, as well", analysts said.

The state of the economy as shown by the central bank in its quarterly report is line with the initial projections, indications to achieve positively, the 5.4 per cent GDP growth target.

Plus signs were strewn all over the list, prominent gainers among them being, the BOC Pakistan, the IGI, the Gatron Industries and the Wyeth Pakistan, followed by the Nestle MilkPak and the Siemens Pakistan.

The EFU Life, Shahtaj Sugar, Lakson Tobacco, Engro Chemical, Mehmood Textiles, Tri-Pack Films were the prominent gainers.

Losers were led by the Mitchell's Fruits, Colgate Pakistan, Sapphire Fibre, Dawood Hercules, Ghani Glass, Pakistan Services and many others, but the largest decline was recorded in the Parke-Davis and some others.