10 January 2005	Monday	28 Ziqa'ad 1425

The stocks remained bullish in the preceding week as leading banks and financial institutions continued to build their positions up at inflated levels amid reports of higher corporate earnings, notably in the textile sector.

The market witnessed a modest pruning at the fag-end of the week but failed to cause major dents in the price structure. Bulk of the selling was steadily absorbed at dips.

Opinions about the weekend sell-off, however, were divided. Some said that free-float from the carryover market had started trickling in, and its pace could be accelerated by next week.

But some others claimed that the ready absorption of all sale offers indicated that the bulls were not inclined to entertain the bearish ideas at least for near-term.

The KSE 100-share index, therefore, maintained its upward thrust for fourth consecutive week on the strength of leading base shares and it appeared that it was now eyeing the next target of 7,000 points, provided the current price flare-up was sustained.

After having breached through the barrier of 6,300 points and it stood firm above as leading base shares, notably the PTCL, the OGDC, the PPL, the PSO and some others set their new career-best levels but bulk of the buying remained unsatisfied. It finally finished around 6,318 up 100 points adding well over Rs40 billion to the market capital at Rs1,764 billion.

The market's current rise may have worried the leading analysts as its highly overbought position needed correction on technical grounds alone. Delay in long-overdue technical correction, which could add to its strength appeared nowhere around for reasons beyond the wisdom of leading analysts.

The market seemed to have risen beyond its mandate based on basic fundamentals said a leading analyst adding,"I feared a massive retreat which could take along both, the big and small ones".

Bargain-hunting and speculative buying also had a limit but the straight fight between the leading bulls and bears did not allow technical forces to defuse prevailing tension.

"Both, the index level and price flare-up are close to their saturation points", he said. "All were waiting for historical reversal and hoped that it could save small investors from a massive reaction and the allied losses".

While all leading shares either had reached the saturation point, or were facing the shortage of floating stock. A section of the investors opted for low-priced textile shares which in totality had performed credibly both on local and export fronts in the backdrop of a record cotton crop of about 14 million bales.

"Textile shares had the potential to rise about 20 per cent from their current levels on the strength of their earnings", brokers said, adding "sharp raise in their prices signals a good beginning had already been made".

Unlike the previous week, instances of foreign buying on selected counters were not lacking, which in turn evoked good interest from the locals who followed their lead, taking bigger stake in them.

Massive foreign buying in the PTCL, Nishat Mills and some others featured the trading on stock market where all other witnessed active covering purchases. New Year buying seemed to have made its debut brokers said adding, the bulk of support originated from foreign investors in an apparent bid to corner the floating stock of those including the PTCL before their privatization.

The market's buoyant mood was also well reflected in the steep increase in the KSE index which maintained its upward drive and finished at its career-best level. "It could well prove a takeoff point of its forward thrust to the index level of 7,000" points, said a leading broker, "but the rise could progress on the pace of privatization of the state-owned units and corporate earnings".

"I don't think float from the highly overbought market was trickling in", claimed a leading stock analyst, "institutional traders were holding on to their long positions, while weak holders were getting out".

An early run-up was aided by fresh heavy buying in the PTCL and some other leading shares, including the Nishat Mills and the OGDC, as their floating stock was being squeezed by some foreign investors during the last couple of weeks. All had soared to their new career-best levels.

But some others predicted an attractive bait of sell-off, of the state-owned units including the Kot Addu Power Company during the current month and the PTCL and the PSO by the middle of the year was expected to keep investors in an upbeat mood in the coming months, also.

"Unlike the year-end sessions, there was now enough money around from the banks and financial institutions", they said," it would be back in share business during the next couple of weeks and will again create boom conditions aided by higher corporate dividend".

The price flare-up on almost all counters was phenomenal but not backed by objective conditions. The Shell Pakistan, the PSO, the Pakistan Oilfield, the PPL, the Pakistan Cables, the Clariant Pakistan, the Atlas Honda, the Bhanero Textiles, the Island Textiles, and many others hit their career-best levels.

Among important, Lakson Tobacco remained volatile, moving either-way and so did the Nestle MilkPak, the Wyeth Pakistan, the Siemens Pakistan and some others including the Pakistan Services and the Treet Corporation.

FORWARD COUNTER: Despite weekend selling at higher levels, all actives finished with smart gains, major gainer being the Nishat Mills, followed by the MCB, the PPL, the PSO, the Pakistan Oilfields, the PTCL, the OGDC and the Fauji Fertiliser Bin Qasim.