Stocks remained bullish last week as investors made heavy covering purchases in the energy sector. There were predictions of higher capital gains due to massive inventory gains on account of steep increase in world oil prices.

Perceptions that the market could get a major boost following the take over of Shaukat Aziz as the Prime Minister by next week was another aiding factor. Snap rally at the weekend was initiated by the heavy-buying in energy shares amid hopes of inventory gains in the backdrop of a record increase in world oil prices to $48 per barrel. The PSO, the Shell Pakistan - after the final dividend of 285 per cent - the National and Pakistan refineries were major benefactors.

Local bourses welcomed Shaukat Aziz's victory but full reaction to it will be known after he takes over as the Premier by next week. He is well known for his investment-friendly perception towards the financial sector.

However, optimism was prevalent, as the market eagerly awaited the swearing-in of the new Prime Minister. The weekend run-up is billed as a "treat" to Shaukat Aziz amid hopes of fresh stock-trading era.

The KSE 100-share index managed to finish well above the psychological barrier of 5,400 at 5,409.05, up 73.34 points as leading base shares remained in active demand. The market capitalization also swelled to Rs1,464.00 billion from the previous Rs1,437.00 billion.

A strong rally at the weekend aided by heavy-buying in energy shares indicated that the sailing could be more smooth by next week. "I don't call it a belated reaction to election victory," said a broker while commenting on the run-up". "In a way it may have relevance to the market optimism as hopes of more investment-friendly financial reforms are making rounds here, he added".

Although, some negative developments halted the market's run-up but most leading shares managed to hold on to mid-week gains. Two negative factors seem to have marred the investors' positive reaction.

However, the CVT-driven rally could not be reinforced by the victory owing to heavy float from the carryover market and a negative statement by the chief of the Security and Exchange Commission of Pakistan (SECP).

He is reported to have denied official move to a rate cut or a waiver on the CVT. The market which responded bullishly to rumours fell from early week highs."The market is sure to react bullishly possibly by next week as by that time most technical irritants and rumour-based speculative-run will be over", said the analysts.

Good days are ahead as the financial minister's policies have changed the entire share business outlook in last four years, they said. Earlier, investors flooded the market and covered positions at lower levels aided by rumours that the government may withdraw the Capital Value Tax levied in the federal budget.

Although, chances of a CVT waiver appears a remote possibility but speculative forces made it look so and lured investors back into the market, giving the needed push to falling prices and terribly sluggish trading volumes, brokers said.

The rumour was given credence on reports that India is also withdrawing an identical levy to restore normalcy to stock trading, which had shown a considerable contraction after the imposition of the CVT.

The KSE 100-share index virtually raced toward its pre-reaction levels after the rumour, and finished with a smart recovery of 48.08 points at 5,377.75 as compared 5,335.67 a day earlier as all the leading base shares finished higher in an expanded turnover figure. The market capital also recovered by Rs13 billion at Rs1,450.192 billion.

It did test the index level of 5,400, as together with the August 18, election victory, the CVT withdrawal rumour could take it to any heights. Shaukat Aziz had imposed the CVT on share business at the rate of 0.01 per cent despite protests by the bourses and brokers.

Since then, the daily volume started shrinking from an average figure of 350 million shares to 79 million, and it was speculated to fall further as investors were progressively losing interest in daily trading.

There, however, was no official word on the issue but speculators may have taken cue that Shaukat Aziz could follow the Indian CVT decision, and oblige investors in the form of a waiver", analyst hoped. After several lean sessions, advancing shares forced a decisive lead over the losing ones at 231 to 75, with 42 shares holding on to last levels.

Leading gainers were led by the Bata Pakistan, Colgate Pakistan, Atlas Battery, Arif Habib Securities, Jahangir Siddiqui Bank, Aventis, and the Shell Pakistan, which posted gains ranging from Rs4.80 to 17, the largest rise being in the Shell.

Other good gainers included the Exide Pakistan, Shakargnaj Sugar, Pakistan Engineering, the ECO Pak, Suraj Cotton, Noon Sugar, the EFU Life and Javed Omer, Nestle MilkPak, Fazal Textiles, Reckitt and Benckiser, Glaxo-Wellcome, Pakistan Cables and several others. Prominent losers included the Bhanero Textiles, Pakistan Hotels, Al-Abbas Sugar, Sapphire Fibre, National Foods, Thal and the IGI Insurance.

FORWARD COUNTER: The Pakistan Petroleum and the PSO followed by the OGDC performed well during the week and finished with good gains wiping out mid-week losses. The D.G.Khan Cement, Fauji Fertiliser, National Bank, the PTCL and the Hub-Power also put up a good show amid active trading and so did some others.