Investors refrain from taking a breather amid rising market
By Muhammad Aslam
Stocks maintained their upward drive during the last week as investors were not inclined to take even a technical breather amid predictions that the market is set to better all previous records both in terms of index level and market capital.
Opinions are divided over the brief interruption at the weekend session which clipped about 38 points from the KSE 100-share index but whether or not the technical correction will be extended is anybody's guess in the backdrop of positive market fundamentals.
"The talk of index level of 6,000 may have some relevance to the changed corporate scenario," one analyst says adding "the bulls are poised for a big kill in the sessions to come cashing in on the president's US visit".
The KSE 100-share index, therefore, settled well above the crucial level of 5,700, which analysts predict could well prove a take-off point for its upward drive to the next target of 6,000 points. It hit the week's peak level at 5,775.
Weekend selling in an overbought market did clip some of the initial gains but the underlying sentiment remained uppishly-inclined. There is, however, a loud whispering in the corridors, the moot point being "whether or not the price flare-up or the index's meteoric rise to all-time highs so far is genuine or speculative".
KSE 100-share index finished with a gain of 126 points at 5,702, adding about Rs50 billion to the market capital at Rs1,590 billion. There was no precise perception about the future market direction.
Some analysts say the rise is genuine leading to continuity in fiscal and financial policies after President Bush's nod that "he intends to work with President Musharraf more closely during the next four years".
The other aiding factor is said to be higher corporate earnings and a fair return for investors on investment in the share business both in terms of capital gains and higher dividend, with per share earning being around 10 per cent from the previous seven to eight per cent. But some other fear the heating up of the political scenario on the president's uniform issue could work against the market sentiment if there is any violence in the backdrop of public agitation both by the MMA and the ARD.
More than one positive developments, the president's meeting with Bush and year-end considerations seem to have triggered buy stops on selected counters, although negative fallout of higher investment and volume on the carryover market was still there but investors relegated them to a secondary position at least for the near-term.
The index, therefore, confidently crossed the Rubicon after several abortive attempts and finally breached through the crucial barrier of 5,700 on heavy speculative buying fuelled by the market talk of massive foreign investment and boost in trade between the Pakistan and US.
"President Bush's praise for Pakistan's support against war on terrorism may not open flood gates for the US investment or a major boost in exports, punters made it look so", some brokers jokingly said.
No one could deny the fact that the president's US visit is very positive in more than one ways but it may have an impact on the economy and on the aid front on long-term basis, they said.
The index surpassed the previous all-time peak level of 5,620.00 set in (intra-day 5,660), April this year and analysts predict its near-term chart point could be around 5,800 or slightly above it.
The market is in a buoyant mood after having passed through a number of lean sessions but opinions are divided over the future outlook in the backdrop of impending political tension followed by opposition's anti-uniform drive.
Banking sector led the market advance, heralding the year-end mopping operations and portfolio adjustment followed by punters and speculative forces, enabling the index to set new highs.
Energy shares, notably PSO and Shell Pakistan also came in for strong demand at the current lower levels on reports that the government will pay another Rs1 billion to oil marketing companies as a import price differential.
The government has maintained prices at the retailers-end unchanged for the last couple of months. The recent statements from the prime minister on the state of economic recovery and performance of the corporate sector aided the market's upturn.
The gainers, which dominated the list each session throughout the week, reflected price flare-up with buyers all-around as no one was inclined to miss the rising market and most of them rode the bandwagon.
Textiles, energy, sugar, fertilizer, and blue chips on other counters, including Lakson Tobacco, Gatron Industries, Berger Paints, BOC Pakistan, Siemens Pakistan, Rafhan Maize products, Wyeth Pakistan, Parke-Davis were leading among them rising to their new career best levels.
Barring Treet Corporation, National Foods, Noon Pakistan, Aventis, Central Insurance, Suzuki Motors, Grays of Cambridge and Island Textiles, which suffered sharp pruning, others fell fractionally.
FORWARD COUNTER: Much of the activity on this counter remained confined to Nishat Mills, which rose by Rs15 followed by Sui Northern Gas, MCB, Fauji Ferilizer, Hub-Power, PPL but on the other hand Pakistan Oilfields, ICI Pakistan and OGDC suffered fall.
