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| January 23, 2006 | Monday | Zilhaj 22, 1426 |
Bourses embark on record making spree
THE stocks last week set new records, both in terms of the index level and the volume figures, as investors continued to build-up long positions on selected counters aided by the reports of impressive corporate earnings and the rumours of higher dividend and bonus shares by the banks and the cement companies.
The market literally followed an old adage “as goes the January, so goes the market”. The highly inflated levels had no relevance to the persistent buying euphoria.
The phenomenon was also well-reflected in the post-Eid holiday trading week. The KSE 100-share index confidently crossed consecutive psychological barriers beyond 10,000 boosted by fresh heavy buying in the bank, oil and cement shares, ignoring the negative fallout of the prevailing political tensions.
At the weekend session, it shortly surpassed the previous all-time peak level of 10,303 at 10,328.97 points but failed to sustain it at the late weekend selling.
But the credit for sustaining the initial run-up beyond the index level of 10,000 points largely goes to President’s announcement of building the Bhasha and Muand dams first, and the rest later on, including the Kalabagh.
The announcement defused the prevailing tension on the Kalabagh dam issue after its relegation to a secondary position which the bulls capitalized after opting for massive deals on some counters as was reflected by the large daily volumes.
Although, the $6.5 billion plus dams would take some years, the perception that they would significantly add to the economic growth and corporate sector induced the investors to go for those stocks, notably cement, which will be the chief beneficiary when the work starts possibly by next month.
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After breaking successive barriers above 10,000, it finished with a smart rise of 287.68 points at 10,227.87 as compared to previous 9,990.19. The market capital also swelled to $50 billion.
Although opinions about the future direction of the index were divided but the leading analysts predicted that it could sustain the level beyond 10,000 in the coming weeks also and could touch its year’s possible high of 12,000 points.
They ruled out the possibility of previous March-like crash as basic fundamentals now have undergone major changes. The higher corporate dividend, steady growth rates and a massive privatization programme of the state-owned units, including the PSO, the Pakistan Petroleum could keep investors in a happy mood during the current year.
Resuming trading after about a week’s extended Eid holidays, it steadily rose to hit the week’s highest level at 10,259.00 points but the late selling pushed it modestly lower.
The analysts attributed the index’s sustained march beyond the 10,000 level to the appointment of the new Security and Exchange Commission of Pakistan (SECP) chief, amid hopes that the tensions created by the former chairman to disturb the decade-old status quo may not be repeated by the new comer.
But the time will show whether he was right or wrong on the issue of transparency in stock trading to attract more foreign investors, they added.
The KSE members had taken the removal of the former chairman during the Eid holidays as their moral victory, said a leading broker adding, they had been at odds with him on many important issues, including his dictatorial attitude.
The march of the index to its next target of 12,000 points marks the silent victory for those who have taken the stand to protect their legal rights on the KSE affairs.
Some brokers, however, doubt the index’s ability to rise further in the backdrop of political tensions, notably the Balochistan situation but the investors temporarily ignored them amid hopes of tension-free stock trading.
Despite being in a highly overbought position, the bank, oil and cement shares led the market advance under the lead of the National Bank, the OGDC, the MCB and the D.G.Khan Cement which posted fresh sharp gains amid active trading. The Faysal Bank and the PTCL also performed well.
The gainers were led by the Unilever Pakistan, Wyeth Pakistan, Nestle Pakistan, Arif Habib Securities, Dawood Hercules, Gillette Pakistan, National Refinery, Attock Petroleum, Suzuki Motors, the Colgate Pakistan, Shell Pakistan, Siemens Pakistan, Atlas Honda and several others. While losses on the other hand were mostly modest as investors held on to their positions anticipating higher capital gains.
FORWARD COUNTER: Speculative issues on the cleared list also followed the lead of their counterparts in the ready section and in some case rose sharply higher under the lead of the National Bank, the OGDC, Nishat Mills, the D.G. Khan Cement, the MCB, Faysal Bank and some others. But the PTCL and some others failed to sustain the early run on late selling.—Muhammad Aslam
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