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THE stock market, last week demonstrated in more than one ways that it had the will and perception to respond bullish to positive news if it was allowed to follow the normal trading course with no leg-pulling from the outside. An indication to which was evident from the snap market U-turn followed by the reports that all pending regulatory issues on which the SECP had reservations were settled down.
The stocks closed on a bullish note, reminiscent of the boom conditions. Investors rushed to cover their positions at rising prices leading to an all-round price flare-up.
After breaking successive psychological barriers, the KSE 100-share index recovered 746 point at 7,213.17 and added Rs193 billion to the market capital at Rs2,013.886 billion.
Throughout the week, positive news followed in quick succession. The first was the selling of controlling shares of the National Refinery to the Attock Oil Group, who already possessed a big stake in the business.
The main positive factor was said to be the removal of irritants, including an increase in the broker-free float in forward trading from one to three and in some cases to five per cent, and a cut in margin requirements from 100 to 50 per cent
What reinforced the investor-perception of a future robust market was the buying of the NRL shares at inflated rates. They hoped of getting higher prices for the UBL, the PTCL and the PSO, which were in line for disinvestment.
The chunk Rs17 billion of the NRL sale proceeds were expected to be ploughed back in share business through the National Investment Trust (NIT), who holds 20 per cent stake, the analysts said.
The downward drift, therefore, was halted as investors covered their positions in energy shares at attractively lower levels but the light volume indicated that the general buyer was conspicuous of his absence.
The pre-budget speculative buying may have made its debut on certain counters but no one was inclined to ride the bandwagon until the market took a definite turn for the better.
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The rally though confined to most of the leading shares was robust but whether it could sustain the trend would set the market’s future direction. The talk of tax relief in forthcoming budget was making rounds but it would take time for big players to participate in daily dealings. The recovery was aided by some positive signals such as the corporate incentives. After hitting the low at 6,457.28 points, the index finished at 6,707.56.
Leading shares, notably the PTCL, the PSO, the OGDC, the NBP, the Pakistan Oilfields, and the Pakistan Petroleum recovered on active short-covering at lower levels. The lead was actively picked up by other sectors, leading to a broad-based rally.
We don’t call it a pre-budget rally but signs were that a number of leading brokers could find cue to fiscal measures, said analysts adding that some other positive developments such as margin financing by various banks may have been a supporting factor.
However, budgetary leaks could be followed by the less-informed and may lead to a sustainable rally.
A banking consortium had committed Rs30 billion for margin financing which meant easy money supply at competitive rates. Phasing out of Badla in between could take its financial toll.
Low volumes reflected that the investors were holding on to their positions in anticipation of a strong pre-budget speculative rally, they said.
Although, the bulk of buying was confined to oil shares but the leading shares in other sectors, including cement, auto, fertilizer and pharma also, performed well on active support.
Oil shares led the market recovery under the lead of Pakistan Refinery, Attock Refinery, the PPL, Pakistan Oilfields, the PSO and National Refinery.
Other good gainers included the Central Insurance, the United Sugar, the OGDC, the Engro Chemical, the Fauji Fertiliser, the BOC Pakistan, and Al-Ghazi Tractors.
Losers included the Nishat Chunian, the JWD Sugar, the IGI Insurance, Sitara Chemical, the Pakistan Cables, Fazal Cloth, the Sapphire Textiles, the BOC Pakistan, the Security Papers, Valika Fabrics and Javed Omer.
FORWARD COUNTER: Oil shares led the market advance on this counter under the lead of the PSO, the Pakistan Petroleum, the OGDC, the Pakistan Oilfields and the PTCL followed by the Fauji Fertiliser Bin Qasim, and some others. The Engro Chemical, the Fauji Fertiliser and some others also posted good gains.
The United Bank which opened for public subscription on June 3, was quoted around Rs62 after having risen at one stage to Rs65.—Muhammad Aslam
