All roads led to the Khalian Street, the Pakistan's Wall Street, during the previous week as investors continued to build- up long positions on selected counters amid predictions of an imminent price flare-up.
Massive volumes in individual shares, notably the OGDC, the Fauji Cement and the PTCL reflected that some foreign interest have made deeper inroads on the selected counters amid perceptions of falling risk profile in the share business for foreign investors.
Stocks, therefore, maintained their upward drive as investors were not inclined to take a technical breather despite being in a highly overbought position and fraught with high financial risks, both for small and genuine investors.
New records both in terms of index level and single-session volume were established amid an unprecedented price flare-ups on the selected counters. The KSE had to intervene to save small investors during the week from the negative fallout of the speculative run. The single-session volume at the weekend session soared to an all-time peak level of 1.122 billion shares, surpassing its previous record of 963 million shares established in August last.
In the last two weeks, the KSE 100-share index breached through two successive barriers of 5,400 and 5,500 points, signalling the bulls may not take a pause before reaching their near-term target of 6,000 points. It finally ended with a massive rise of 210 points at 5,582.28 points as compared to previous week's 5,371.63 or 5.25 per cent.
The market capital was also heading to attain its next target of Rs1,500 billion allowing foreign funds to have an overview of the changed investment scenario in the local bourse where both the P/E and the dividend return were between eight and 10 per cent.
"It now appeared more easy to hit the 6,000-point index level after the award of cell licences to two foreign companies including on Syrian, involving an investment of $600 million", analysts said.
The cell deal may not open floodgate for direct foreign investment it certainly will have a positive impact on the Pakistan's credit rating among the world rating agencies as it reflected the foreign investors' confidence in local financial policies.
It was a massive foreign investment in the telecom sector according to Pakistani standards but the important thing was that it reflected confidence in local financial policies.
An idea of buying euphoria may well be had from the fact that the KSE had to apply circuit-breakers in about three dozen shares to contain the price flare-up after the carryover rates touched the high mark of 17 per cent.
"In view of the market's statistical position, a correction of about 50 points or so may be around in the first session", feared a leading stock analyst, and added "but the bulls are expected to be back in the market and will again lift the index to pre- reaction levels".
The index ended with an extended gain of 72.20 points at 5,443.83 as compared to 5,371.63 at the last weekend as all the leading base shares rose further higher under the lead of the PTCL which burst into activity followed by the reports that its management had launched phone bill cards.
The market capital also soared to Rs1,453.219 billion against the previous Rs1,434.697 billion up Rs18.522 billion owing to steep rise in the heavily-capitalized shares.
But the week's highlight was provided by heavy buying both in the National and the Muslim Commercial banks which appeared virtually racing toward their new chart points on sustained buying. The PTCL also remained in strong demand on reports that it had launched the phone bill cards.
No one could deny the fact that the market was in a highly overbought position but the long-overdue correction was not forthcoming. Leading stock analysts failed to pinpoint any specific reason behind this market phenomenon.
"It was not that far to name the buyers in an overbought market", said a leading broker "but the question was whether small investors should ride the bandwagon". "There could be a massive shakeout around", another said adding, "which may take along with it everything that came in its way".
However, strong financial buying reflects the market may fall from the current levels but not to that level being predicted by some. "It had sound reasons behind to stay bullish", he added. "The American factor which had made deep inroads in the psychology of an investor will not disappear and will remain a major sustaining factor possibly up to the index level of 6,000 points", market sources said.
Bulk of the support, however, again remained confined to some leading individual shares, notably the National Bank which had risen by about Rs12 during the last week amid heavy covering purchases followed by gas shares on reports of massive Gulf-based investment in this sector. The MCB followed them on reports of higher interims.
Cement shares did not react bearishly to reports that the government planned to amend the current monopoly control rules to discourage price manipulation by some industrial sector.
Plus signs dominated the list under the lead of HinoPak Motors, Aventis Pharma, the EFU General, Javed Omer, Central Insurance, Atlas Battery and Shell Gas LPG which posted gains, Siemens Pakistan, Glaxo-SKF, Thal, Atlas Battery, the OGDC, Millat Tractors, the D.G.Khan Cement and many other also posted good gains.
Losses on the other hand were fractional barring the Attock Refinery, the Clover Pakistan, the New Jubilee Insurance, Island Textiles and some others. The Wyeth Pakistan was leading among the losers, off Rs72.
Weekly trading volume soared to a new record of over four billion shares bulk of which was shared by the OGDC, the PTCL, the D.G.Khan Cement, the Fauji Cement, the Hub-Power and several others.
FORWARD COUNTER: Leading shares on the cleared list also showed good gains under the lead of the OGDC, the Nishat Mills, the MCB, the National Motors, the Hub-Power, the Engro Chemical and the Fauji Fertiliser on active support. All finished their career-best levels.
