02 February 2004	Monday	10 Zilhaj 1424

High dividend announced by some leading companies, peace talks with India beginning next month, and positive news from the economic front did not allow investors to leave the arena , while making fresh covering purchases in an overbought market during the last week.

All previous records, both in terms of the capital and index were battered, with new ones set on the strength of positive basic fundamentals.

The KSE 100-share index gained above 330 points in January alone, reinforcing the analysts perception that as goes the January so goes the year.

It is a hefty rise viewed in the backdrop of some depressants, notably prevailing turmoil on the nuclear front amid conflicting reports about the possible leakage and debriefing, they said.

It confidently crossed the barrier of 4,800 points last week as bulls were not inclined to take, even a technical breather and convincingly rode the bandwagon despite a long coming weekend on account of Eid-holidays. This was aided by higher dividends and positive news from the economic front.

"The index level of 4,800 points is near-term goal", said a leading bull adding, "we are eyeing the 5,000-point figure, possibly by the end of next month".

The index finally ended with a hefty rise of 78.96 points at 4,841.33 points, pushing the market capital by over Rs25 billion at Rs1,270.464 billion, as the massively capitalized shares were actively traded on higher side.

All background news may not be that encouraging, notably in the backdrop of turmoil on the nuclear issue and the debriefing of some leading scientists. The dividend-related buying spree continued unabated keeping the leading investors as well as the retailers in a bullish mood.

"It is time to buy on rumours and sell on news", brokers said adding "no news is a good news in the prevailing buying euphoria".

Despite some below-the-market-expectations of dividends by the Engro Chemical, which omitted widely-rumoured bonus issue and came out with a final of 35 per cent (interim of 45 per cent already paid), investors were not inclined to entertain the bearish outlook at least for near-term.

An interim dividend of 60 per cent by the Shell Pakistan LPG and the final payout of 30 per cent by the Tri-Pack Films were well received in the market as was reflected by a sharp increase in their share values.

However, on top of them came an interim dividend of 70 per cent by the PSO, and 15 per cent final by the Fauji Fertiliser, which already has an interim dividend of 85 per cent, making the total for the last year to 100 per cent.

Both news sustained the market's upward drive at the weekend sessions, despite a long weekend. The final dividend of 136 per cent, (116 per cent already paid) by the Unilever Pakistan also supported the market's run-up.

Reports that the Board of Directors of the Hub-Power will consider an interim dividend during March meeting generated a lot of interest in it and other energy shares, including the PSO.

The future outlook appears bullish as the return on investment in shares at 10 to 15 per cent is much higher than any other mode of investment, including the National Saving Schemes and deposits in banks, analysts predict.

The market's buoyant mood was also well-reflected in the steep rise in market capital which soared by Rs23.968 billion to Rs1,244.247 billion, as the heavily capitalized shares, including the OGDC recovered from the overnight low levels.

Apart from a cut in carryover rates to about 15 per cent from the overnight 19 per cent, rumours about the advent of foreign support on selected counters also aided the market's recovery, brokers said.

Barring the Shell Pakistan, which remained under pressure and shed Rs32, energy and blue chips on other counters led the market recovery amid active trading.

The KSE 100-share index recovered a good part of the overnight fall and recovered to close higher by 71.25 points at 4,748.41, reflecting the strength of leading base shares after a sharp drop to 14 per cent from 18 per cent in the carryover rates.

"I don't think bears have the guts and will to outwit bulls at this stage of changing background news", a leading stock analyst at the Multiline Securities claimed and added "a fall in carryover rates (badla) from the previous 18 per cent to 15 per cent limiting the exposure risk appears to be the chief stimulating factor behind the snap rally".

As bulls are eyeing the index level of 5,000 points, of course after due technical corrections, there is no possibility, at least for the near-term, of bears to outwit bulls, he maintained.

The recovery was more reassuring in the backdrop of negative fallout of a steep decline of 33 per cent in the interim earnings of the Shell Pakistan and a sharp cut in the interim dividend to Rs6.50 from the previous Rs9.50 per share.

However, snap rally demonstrated that the market is capable of riding the tides sans the dip in the Shell Pakistan earnings, allaying the fears entertained by a section of analysts that it could take the entire market along with it in the minus column.

News from the foreign aid front, notably a possible extension in the US credit line to $3 billion and the Commonwealth Development Corporation (CDC) plan to invest in Pakistan's energy sector were some other supporting factors.

Prominent gainers were led by the IGI Insurance, the Rafhan Maize, the Siemens Pakistan, the Unilever Pakistan, the Ghandhara Diesel (right), the Pakistan Refinery and the Parke-Davis, the National Refinery, the Attock Refinery, the PSO, the Shell Gas, the Noon Pakistan and the Ferozesons Lab.

Other leading gainers included Javed Omer, Fauji Fertiliser, Aventis, Pakistan Oilfields and many other.

Top losers included food shares under the lead of Nestle MilkPak, Rafhan Maize, Rafhan Bestfoods, Colgate Pakistan, Bolan Castings, Siemens Pakistan, Clover Pakistan, and the Dreamworld.

FORWARD COUNTER: Speculative issues on the forward counter also showed fresh gains and rose under the lead of the PTCL, the PSO, the Sui Northern Gas followed by the MCB, the Engro Chemical and the Nishat Mills on active follow-up support.

The Hub-Power after initial weakness also finished higher and so did the FF Bin Qasim, the Pak PTA, Dewan Salman and some others.