Stocks create history by breaking six consecutive barriers
By Muhammad Aslam
The stocks maintained an uppish leaning last week despite active profit-selling on some counters towards the end of the week. The on-balance trend showed that the current run-up was not overdone.
The KSE index rose by 551 points and the market capital to new highs at 8,285.40 points and Rs2,305 billion, respectively.
But some leading analysts predicted that the setting in of a correction at inflated levels at the end of the week could prove a prelude to a massive sell-off by next week.
"The dividend announcements plus the bonus shares by mega issues were out, barring the PPL which could lead to a long overdue correction possibly by next week," predicted a leading analyst.
All previous records, both in terms of the index level and the market capital were broken last week as higher dividend plus bonus shares by the bank, energy and some other leading companies, notably the PTCL did not allow financial traders to indulge in hasty selling.
Stray selling here and there clipped extreme gains on few counters and failed in causing major dents to the prevailing structure. "The current run-up may not halt but the market needs a technical correction at this stage which in turn would make easy for it to rise further in coming weeks".
Some leading companies were yet to announce their interim results and once the current circle of payouts was completed the consolidation forces will take their own course. But for the time being profit-selling was actively being absorbed both at the rise and fall. This reflected bullish future to continue.
But some others feared an overdue correction and predicted that there would be massive unloading on selected counters which in turn could halt the market's upward march to the index level of 9,000 points.
Last week, the KSE 100-share index broke six consecutive barriers bettering its previous record of five as it marched forward from 7,734.03 points to hit the highest at around 8,400 points, although the weekend selling pushed it down to finish around 8,285.48 points, up 551.45 over the week.
Leading bulls were eyeing the index level of 9,000 and how would they proceed to achieve that level would be seen next week, although much would depend on the pay out of the PPL. The PTLC had already announced a quarterly dividend of 20 per cent which was billed on the higher side of the analysts' predictions.
Market capital also soared from the previous figure of Rs2,148 to 2,305 billion as the massively capitalized shares, notably the OGDC, the PTCL and the PPL rose sharply higher and so did some blue chips.
The KSE 100-share index maintained its upward drive for six sessions and virtually raced towards its new target of 9,000 after having added another 700 points or seven per cent and was pretty close to its new crucial level. "No one was clear about the post-8,000 point level", said a leading broker but some others predicted that the level of 10,000 now may not be that ambitious".
Leading analysts, however, were not inclined to comment on the market's meteoric rise to all-time peak levels as the bull-run was unfathomable for them and did not fall in line with the objective corporate background news excepting the flurry of higher dividend by some leading companies.
An interim dividend of 110 per cent sans widely speculated bonus shares by the PSO ensuring an EPS of Rs15.22 was on the higher side of the analysts' predictions but was said to be one of the stimulating factors behind the current run-up. However, its share value reacted bullish.
Another factor behind the strong speculative buying was said to be the upcoming board meeting of leading companies and the market talk of an interim dividend and bonus shares.
Floor brokers said that the dividend-driven rally was expected to continue in coming sessions also as the massively committed financial institutions and punters may opt for hasty loadings on counter.
"There could be partial sell-off on selected counters after the index level of 8,000 but there was no possibility of major shakeout as investor-perception had altogether changed in the backdrop of an ambitious dis-investment programme of the state-owned units, including the PSO, the PTCL, the Pakistan Steel and some others before June this year", they said.
Barring weekend closing, the advancing shares dominated the list under the lead of Javed Omer, Dawood Hercules, Security Papers, Treet Corporation, the PPL, Rafhan Maize, and National Refinery, which posted gains. Other good gainers included the Bank of Punjab, Jahangir Siddiqui and Co, Premier Sugar, Mari Gas, Packages and the PNSC.
Losers were led by the Gul Ahmed Textiles, Sapphire Fibre, Gadoon Textiles, the ICI Pakistan, Fauji Fertilser, Engro Chemical, the PNSC, and Gillette Pakistan, PICIC, International Industries, the ADK Securities, Atlas Honda and several others on weekend selling.
FORWARD COUNTER: The PPL remained under squeeze throughout last week and rose by Rs47.00 followed by the OGDC which also rose by Rs24 at Rs252 and 122.25, respectively. The Sui Northern Gas, Nishat Mills, the PSO and some others also rose but the PTCL on the other hand fell modestly and so did some others on late selling.
