Stocks remained in an optimistic mood last week as leading punters were not inclined to allow the market to fall below its current level. Some are reportedly trapped in the cobweb of earlier price manoeuvring and wanted a safe exit.
That was perhaps why bomb blast in a city mosque at the weekend session, killing a number of persons failed to dampen their buying enthusiasm after a temporary panic, which allowed them to cover positions at dips.
However, goal of 6,000-point index level now appears elusive as bulls and bears intend to keep it fluctuating within the range of 100 points at around 5,550 chart level.
There are lots of portfolio readjustments as a section of investors, shifted in part, their overvalued counters to the undervalued in anticipation of higher capital gains. Most blue chips appear to have already touched their upper price limits and may not have potential for fresh capital appreciation.
The KSE 100-share index, therefore, appears reluctant to explore new grounds beyond 5,500 level. Leading bulls seem to have decided to go by basic market fundamentals rather than opting for massive speculative buying. It finally finished around 5,530, up 99 points adding Rs56 billion to the market capital at 5,529.19 and Rs1,483 billion, respectively.
There was a temporary pause in the market run-up at the weekend followed by reports of a bomb blast in a city mosque and killing of many people. The index fell by a hefty 62 points after the news of bomb blast reached the market but soon recovered as bulls were back in the market and made extensive buying in the pivotals at the dips.
An attractive bait of new IPOs was there which did not allow the investors to leave the market at this stage as chances of capital gains were more bright than ever before. The most immediate among the incoming IPOs being Bank Al-Falah, which will open for public subscription for two days on May 17 and 18. Its 10-rupee share is being offered at premium of Rs20 that is Rs30 per share. In the kerb, it is being quoted around Rs60.
It will be followed by the IPOs of the PIAC, Pakistan Petroleum, the KESC and Kot Ado Power. The market is expected to absorb the free float of all these public offering even at higher asking prices as it has already done in case of the OGDC and the Sui Southern Gas.
Added to it are perceptions of an investment-friendly budget, having a number of fresh incentives, both for the corporate sector and the general investors. Tax exemption on capital gains has, already, been extended for another five years.
Higher interim dividend announcements from some of the leading companies, notably the Siemens Pakistan which came out with an interim of 200 per cent was well-received in the market as was reflected by Rs60 increase in its share value during the post-dividend trading sessions.
Recent easing in carryover rates and share volume, on technical grounds, has also allowed consolidation forces to indulge in fresh manoeuvring on the counters of their choice.
The market may still not be in an ideal oversold position despite the last week's sell-off, but some leading institutional traders made it look so and managed to evoke a lot of sympathetic buying from those holding short positions. Reports of higher corporate earnings, investment friendly new national budget and strong speculative buying on selected counters were among some positive factors, which fuelled the rally.
Although, the index is still far below its April peak level of 5,660 points indicating that the current surge could be maintained during the coming sessions on the strength of higher interim corporate earning reports.
Steep decline in carryover rates from peak to manageable limits, owing to last week's persistent sell-off, gave an ideal opportunity to big ones to strike back at lower levels with the continuation of the weekend surge", analysts said.
A sharp increase of 1.4 to five per cent in petroleum prices was another aiding factor as it generated a lot of speculative buying in energy shares. Massive covering purchases in leading shares, notably the PTCL, the OGDC, National Bank and the MCB signal that the market has already met its technical demands and is well on the way to establish new records.
Heavy buying in leading bank shares notably the National Bank, the MCB, and many others on the strength of higher interim earnings and market talk of good interim payouts was another aiding supporting factor.
"Market appears to be following its previous trend when badla rates fell into single-digit last month and index soared to 5,660 points. Fall in investment is leading it to the same path", brokers predict.
Free-float from the carryover market in most of the blue chips, having a major growth potential is expected to keep the market in a good shape to in the coming sessions, they said.
Plus signs again dominated the list, leading gainers being the IGI Insurance, Gatron Industries, the EFU Life, Glaxo-SKF, Aventis Pharma, Arif Habib Securities, and Siemens Pakistan.
Prominent losers were led by the HinoPak Motors, Shell Pakistan, Fazal Textiles Pak Elektron, Glaxo-SKF, Treet Corporation, Atlas Honda, Exide Battery and some others.
FORWARD COUNTER: A notable feature of the cleared list was the bullish debut of the Bank Al-Falah which finished at Rs65.50 on massive volume of 47 million shares. Together with a premium of Rs20, its face value comes to Rs30 and it finished more than a twice of its face value.
Other leading shares showed mixed trend amid alternate bouts of buying and selling. While, the PTCL managed to finish with a modest rise, the Hub-Power and some other leading shares including the Engro Chemical and Fauji Fertiliser finished lower at the weekend session and so did gas shares. The FF Bin Qasim, however, was an exception and so were some others which managed to finish modestly higher.
