2 May 2005	Monday	22 Rabi-ul-Awwal 1426

THE KSE 100-share index rose by over three per cent last week after enduring heavy battering in the recent past, demonstrating in more than one ways that the worst may now be over. Significantly it was not the size of the rise but a change in the market psychology which in technical terms, reflected some positive developments and an apparent end to a bear market.

High interim dividend and bonus shares would play a positive role once the market settles down and comes out of the procedural problems relating to futures trading. After highly erratic price movements during the preceding week — as the dividend-driven rally faltered half way in the absence of follow-up support both from the financial institutions and leading brokerage houses – major stocks showed a measure of strength thanks to mid-week strong rallies.

Index crossed the barrier of 7,300 points during the mid-week rally. It was last quoted at around 7,104.65 — up by three points as compared to the previous 7,101.38 points. The total market capital stood around the previous level of Rs2,005 billion after fluctuating either-way earlier in the week amid active bouts of buying and selling in favourites.

News on the financial front, notably margin financing, banks announcement to line up market fund, higher corporate earnings, all point to a robust rally in the coming weeks. Predictions by analysts that the settlement of the COT–related issue could give the needed boost to market alone on technical grounds proved short-lived as investors were not inclined to hold long positions even on blue chip counters. No one was sure about the market’s future direction and mostly played in intra-day trading without taking even the calculated risks.

Dividend and bonus announcements by some leading companies were in line with the market perception but they failed to evoke long-term investment buying from the genuine investors. Third interim of 17.5 per cent with two totalling 30 per cent already paid by the OGDC; 25 per cent by Dawood Hercules; 300 per cent by Siemens Engineering Pakistan and an interim of 25 per cent plus bonus shares of 15 per cent by Fauji Fertiliser were on the higher side of expectations.

They did generate temporary flutters here and there on speculative support rather than genuine buying from any leading investor and bank. The chief villain of the game were oil giants which failed to give a direction to the market and reacted after each rise under the lead of the PSO, the OGDC, the Pakistan Oilfields, the PPL and some other heavyweights, including the PTCL, the National Bank, etc.

The stocks did recover from recent lows boosted by higher interim dividend by the OGDC and a massive increase in after-tax profit of the PTCL and the PPL sans third quarter interim. The PTCL, the PSO, the Pakistan Oilfields, the OGDC and the PPL led the market recovery on active short-covering at lower levels aided by sympathetic buying from other quarters in shares whose board meetings were due before April was out. They were the same who led the market into the minus column later in the week on active profit-selling.

Oil giant, the OGDC, which was under pressure since the market crash started four weeks back owing to some clearing problems in the futures March contract, gave a pleasant surprise to analysts after it announced a third quarter interim dividend of 17.5 per cent, giving the needed push to stock trading. Its directors had already paid two interims of 15 per cent each for first and second quarters with indications that the total final could be 60 per cent plus. Its share value surged by Rs4.60 at Rs97.30 demonstrating that it was capable of gaining its past glory on the strength of higher earnings and settlement of the COT-related issues.

Having a weightage of 22 per cent, it pushed the KSE 100-share index higher well above 7,300 points as compared to 7,101 points a week earlier, as all leading base shares recovered from their previous lows under lead of the PTCL and the PSO.

Although, the PTCL omitted the widely speculated interim dividend, an EPS of Rs4.18 on post-tax profit of Rs21.320 billion which was up by nine per cent. “The market was expected to be driven from now on the strength of higher earnings and interim dividend from the cement sector and some leading blue chips whose board meetings were due in the week”, analysts predicted.

While board meeting of the D.G. Khan Cement was due in next couple of sessions, Lucky Cement showed an after-tax profit of Rs582 million for third quarter, the EPS being at Rs2.21.

Moreover, the market was now in a highly oversold position and its technical demands aided by attractively lower levels could work wonders if all went well on the political front, they said.

The week appeared crucial for future direction of the market as it would decide whether or not investors follow the positive corporate news or play on short-term basis, realising profit at the rise, some others said.

FORWARD COUNTER: Speculative issues on forward counters showed divergent trend as investors played on both sides of the fence throughout the week. Trading volume was light owing to some investors’ reservations about the new rules for future trading.

Among leading shares, the OGDC, the PTCL, the Pakistan Oilfields, the PSO and some others managed to finish high. The bank shares, the PPL and Fauji Fertiliser, Bin Qasim fell modestly.—Muhammad Aslam