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| August 29, 2005 | Monday | Rajab 23, 1426 |
Shares attract buyers with increased funding
THE post-Continuous Funding System (CFS) attracted a lot of fresh buying on the selected counters as pressure on the liquidity eased after the cap limit was enhanced to Rs25 billion from Rs12 billion.
However, enthusiasm associated with the CFS was still to manifest as its technicalities were in place for coming weeks. Brokers and investors fully accepted it as an efficient mode of raising funds instead of badla financing.
Despite mid-week interruption, the stocks finished with an extended gain on active short-covering at lower levels triggered by the reports of official acceptance of all major demands of the country’s bourses. This ended the protracted standoff on badla issue.
The KSE 100-share index recovered about nine per cent thus showing the market’s inherent strength. It finished with an extended gain of 273.78 points at 7,585.70 but failed to break the psychological barrier of 7,600 despite many abortive bids. Market capital also rose to Rs2,164 billion from the previous week’s Rs2,091.00 billion, up Rs75 billion.
It was a no-win situation for both the contenders but the chief beneficiary was the daily turnover figure which, amid hopes and fears, has touched the 300- million-share-mark more than once during the week from the previous week’s low of 37 million shares.
The SECP may have gone with the official thinking, having some reservations on the issues, but softened its previous well-known stand as it was good for the market as well as general investor. The coming weeks will show the decision was wise in the market parlance.
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There could be many technical corrections here and there from now onwards but the post-CFS run-up could be sustained in coming sessions as current lower levels ensure quick capital gains for those who had withdrawn to sidelines because of the standoff.
Now was the turn of higher corporate dividends to play their due role in enlarging the capital base, brokers said adding, the current levels could attract any amount of short-covering on the strength of payouts.
Reports were rife that most banks were poised to set new record in terms of earnings, dividend and bonus shares. The Faysal Bank, the Union Bank, the MCB and some others have come out with higher corporate earning, while others including the Bank of Punjab may sustain the current run-up, they said.
The stocks, therefore, emitted bullish sparks boosted by the introduction of the CFS, a modified form of badla financing making available enough liquidity for investors for smooth trading after a protracted bearish spell.
Leading base shares, notably the PTCL, the OGDC, the National Bank, the PSO, the Pakistan Petroleum, the Pakistan Oilfields and some others were market trend setters and rose sharply up.
The market had demonstrated in more than one ways that it could climb on good news as there was not dearth of buyers at the dips.
An air of optimism prevailed as all demands of the stock exchanges were met though a bit late and after a lot of mess which eroded billions from the capital.
Addition of seven scrips under the orbit of Continuous Fund System, including the Pakistan Petroleum, the MCB, the Bank of Punjab, the Sui Northern Gas, the Pak PTA and the Fauji Fertiliser Bin Qasim, and an increase in financing limit to Rs25 billion were some main stimulants agreed between the SECP and bourses chiefs.
The CFS will be used as a bridge to cross over to other modes of share financing, notably margin financing and derivatives. Initially it will be available on the pattern of COT and after the close of the market. But it will run parallel to ready market trading houses, later on.
I think the worst was over now and the market should respond to basic fundamentals, said leading stock analysts while predicting that the market’s performance during the last two sessions reflected the bulls were already at the helm of affairs.
Although plus signs were strewn all over the list as investors covered their positions at lower levels for capital gains. The Arif Habib Securities followed by the Shell Pakistan, the Bank of Punjab, the EFU life, the PSO, the Berger Pints, the OGDC, the ICI Pakistan, the Pakistan Cables and the National Refinery led the market after the announcement of cash dividend plus bonus shares.
The Colgate Pakistan and the Unilever Pakistan were leading among the losers followed by the Gatron Industries, Javed Omer, National Foods, Pakistan Petroleum, Haroon Oils, Packages, and Wyeth Pakistan.
FORWARD COUNTER: Leading shares also showed smart gains after recovering from the recent lows on strong buying at the dips. The OGDC, the PTLC, the Pakistan Petroleum, the Fauji Fertiliser Bin Qasim, the National Bank, the MCB and all other leading shares finished recovered amid active trading. The matured August settlements were rung off the board and in their place September contracts assumed the role of ruling contracts and closed generally higher under the leading shares.—Muhammad Aslam
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