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| July 24, 2006 | Monday | Jumadi-ul-Sani 27, 1427 |
Tax-related issues fail to deter KSE drive
THE stocks maintained an upward drive despite mid-week disruptions on account of the tax-related negative news. There was steady buying of the shares whose companies were due to hold their board meetings next week.
Oil, cement, auto shares attracted bulk of the support, while other actives in banking sector remained under pressure under the lead of the MCB and National Bank amid fears that their profitability may be hurt after two per cent increase in their reserve requirements to seven per cent from the previous five.
The central bank move to redefine its fresh thinking on the national economy and its allied constraints, analysts feared, could drain out billions from the system leaving negative fallout on the liquidity.
The KSE 100-share index last week settled above the crucial level of 10,000 points but its each onward thrust above it was intercepted on the snap selling by bears in the heavily catalogued shares.
Each robust run-up was followed by quick selling indicating a grim battle between the leading bulls and bears. The former were determined to push it further higher, while the latter tried to contain around the benchmark.
It finally finished around 10,257.63 as compared to previous 10,027.09 points as leading index shares turned into a volatile performance amid alternate bouts of buying and selling. The net rise over the week of 230.54 points added Rs64 billion to the market capital at Rs2,880.236 billion.
The mid-week rumours of the tax on share transfers to the Central Depository Company intercepted a strong rally which could have pushed the index to the level of 10,500 points.
However, it was generally believed that the near-term outlook for share business was quite optimistic ahead of the board meetings of some leading companies and the market talk of higher interim final and interim dividend. An indication of which was given by the Rafhan Maize Products whose directors had announced a second interim at the rate of 200 per cent, the first of an identical amount already paid.
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The Pakistani stocks, a day earlier recovered from their overnight lows on active short-covering in the leading oil and other important scrips at lower level followed by some positive developments on the financial and political fronts.
The performance of the KSE index reflected that its near-term direction was beyond the level of 10,000 points and it could maintain its upward drive in the weeks to come.
Among leading oil shares, the OGDC, the Pakistan Petroleum, the Pakistan Oilfields were leading gainers followed by the National Bank, the MCB and the PTCL having a weightage of 60 per cent for being the leading index shares. This was well-reflected in a massive surge.
Apart from anticipatory buying ahead of the board meetings of some leading companies, the other supporting factor was said to be an increase of $3 million in a day in the Special Convertible Rupee Account, which the analysts said could absorb the negative fallout of some on the liquidity front.
But a leading stock analyst Hasnain Asghar Ali attributed the snap rally in the backdrop of heating up of the corporate scenario to the US statement in favour of Pakistan on the Mumbai bomb blasts in the backdrop of the Indian blame.
The market ruled erratic during the week despite the fact that the possibility of new account financial buying was there but some political inhibitions could take their toll on any session, another leading stock analyst Faisal Abbas feared.
However, none disputed the fact that most leading shares were still in the buying range and ensured higher capital gains, although leading investors and institutional traders were not inclined to trigger a price flare-up at this stage, analyst Ashraf Zakria said.
He said the perception that the oil, bank and cement sectors could keep the market in a positive mood in the coming sessions on the strength of their earnings was playing a major role in the market’s current positive stance.
Unlike the previous weeks, plus signs were strewn all over the list, the Shell Gas and the IGI Insurance being the leading gainers, followed by the Abbott Lab, the Clariant Pakistan, the Wyeth Pakistan, the Shell Pakistan, the PSO, the Colgate Pakistan and many others. The Treet Corporation, the Nestle Pakistan, the EFU and the Gatron Industries were leading among the losers.
FORWARD COUNTER: Speculative issues on the forward counter performed credibly well under the lead of the Pakistan Petroleum, the PTCL, the OGDC and the D.G. Khan Cement and many others on active support. The National Bank, however, was an exception which suffered sharp setback and so did some others after an increase in the reserve margin requirements.—Muhammad Aslam
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