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| September 5, 2005 | Monday | Rajab 30, 1426 |
Shares values flare-up on corporate earnings
THERE was no looking back on the stock market last week as investors continued building up long position on oil and bank shares due to higher payouts and a market talk of better interim announcements.
Both, the KSE 100-share index and the market capital were steadily moving towards their pre-reaction level indicating that the current run-up may continue as the share-hungry investors were not inclined to take even a technical breather at this stage.
There could be several positive factors behind the investor-optimism, the chief among which was the end of the stand-off on badla issue with the launching of the Continuous Funding System (CFS) — a modified version of badla.
Owing to steady inflow of investment and speculative buying, the stocks maintained their winning streak as investors continued to build-up long positions on oil and banking sectors followed by the reports of higher earnings and expectations of an enhanced dividend.
The run-up in the former sector was attributed to a sharp increase in the petroleum prices followed by the perception of large inventory gains. While in the latter, the price flare-up was linked to higher corporate earnings and dividend including bonus shares by some.
For the fourth week in a row, the KSE 100-share index touched the five-month highs at 7,871.00 points before easing to 7,789.74 on late selling but there was nothing inherently wrong with the underlying sentiment. The fresh rise over the week was of 204.04 points – a cumulative increase over the week of about 10 per cent.
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The KSE 100-share index had risen by about 10 per cent during the post-CFS trading instead of decades-old badla financing with an increased cap of Rs25 billion, up from Rs12 billion for the forward counter involving 14 active shares.
Technical corrections here and there, notwithstanding the CFS-linked rally were expected to prevail without time limit as most of the leading shares still hold attractive levels and ensure good capital gains, analysts said.
Higher dividend and bonus shares by some leading companies were enthusiastically received by the investors amid hopes that other leading companies would follow the suit adding to the CFS-led buying euphoria.
The market’s bullish mood was also well-reflected in the KSE 100-share index which after breaching through three barriers was close to its next target of 8,000 points as leading base shares including the OGDC, the PTCL and some others remained under the bull-squeeze.
What seemed to have given a pleasant surprise to even well-informed punters was the news of 30 per cent bonus shares by the Bank of Punjab, 25 per cent interim bonus shares by the Glaxo-SKS which generated a lot of anticipatory buying on the related counters.
The Pakistan Petroleum had been in the news since January this year and despite some bad news including forced shutdown and failure of the offshore drilling, managed to declare a higher final dividend of 30 per cent. Its shares value rose further at Rs180.
Analysts said that with the Continuous Funding System in place, the last week’s performance reflected that the capped amount of Rs25 billion may prove too small in a buying market aided by higher corporate announcements.
At the fag-end of the week, the funds used under this head totalled Rs23 billion, slightly below the capped figure.
However, market leaders said that the investors should play within the limits as any deviation including the “inspired one” could create many problems for the budding rally, they said.
One thing was clear that some exponents of badla may be disappointing as the CFS was being accepted as an efficient replacement of the old funding system, difference of opinions on the issue notwithstanding, some others said.
The dividend-driven rally could gain in stature during the next couple of weeks as some of the best announcements from the leading companies were still to come.
Oil shares were actively traded and led the market advance in response to the news that the world crude oil prices have touched the high mark of $70 per barrel. The Shell Pakistan, National Refinery, Pakistan Refinery, Attock Refinery, and the Attock Petroleum were leading among them. Other MNCs which rose sharply were the Ferozsons Lab, Aventis, Rafhan Bestfoods, Pakistan Services, Abbott Lab, Berger Paints and the PNSC.
The Shell LPG Gas and the Wyeth Pakistan were leading among the losers despite the later’s recovery followed by the Artistic Denim, Clover Pakistan, Gatron Industries, Dawood Lawrence, National Foods, Siemens Pakistan and the Lakson Tobacco were prominent.
FORWARD COUNTER: Barring the PTCL which failed to sustain the early run-up and fell on late selling, all other leading speculative shares rose sharply under the lead of Pakistan Oilfields, Pakistan Petroleum followed by the Bank of Punjab after the announcement of interim bonus shares.
—Muhammad Aslam
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