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| July 31, 2006 | Monday | Rajab 4, 1427 |
KSE maintains upward thrust despite negative developments
INVESTORS at the Karachi Stock Exchange ignored the negative developments on political front at the fag-end of previous week. The leading among them followed the basic market fundamentals rather than sail with the under-current of bad news.
The Opposition’s proposed joint no-trust move against the Prime Minister and Muttahida’s threat to part ways with the government if its demands were not met did not deter the investor-enthusiasm as was reflected by the overall performance of the market.
Perception behind the sustained run-up and active support was attributed to the market talk of the presence of strong foreign support in some leading oil shares and higher dividend by the PSO and the Shell Pakistan.
As a result, for the third week in a row, the stocks maintained their upward drive as an attractive bait of capital gains and higher payouts did not allow investors to leave the arena. They actively participated in the proceedings.
Some leading companies, including the MNCs, notably the Unilever Pakistan, the Engro Chemical, the Pakistan Premier Fund too, have announced their interim payouts at the rate of Rs65 per share, final 30 and 25 per cent respectively. This was followed by the International industries which came out with a final of 30 per cent (interim of 20 per cent already paid), plus stock dividend of 33 per cent thus restraining bears to indulge in selling.
Final and interim dividend announcements by some local corporate giants in the banking and oil sectors and some MNCs were due during the month of August, which were expected to keep the market in a positive mood.
The other supporting factor was the report of foreign fund buying in leading oil stocks, notably the OGDC, the Pakistan Petroleum which evoked a substantial sympathetic buying in other blue chips of the bank and cement sectors.
The share market on the opening day of the week i.e., July 24 resumed trading on an optimistic note as investors were not deterred by the developing local and international developments including the situation in Lebanon and continued to make commitments on selected counters guided mostly by an attractive bait of higher corporate payouts.
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The KSE 100-share index, therefore, maintained its upward drive above the benchmark of 10,000 points boosted by active buying in the index-heavy shares, notably in oil, bank and cement sectors.
After touching the week’s peak level of 10,435.00 at one stage, it finished with a clipped gain of 95.87 points at 10,353.52 on late selling but some positive developments on the oil sector were expected to keep it on the higher side.
The OGDC, the Pakistan Petroleum, the PTCL trailing the National Bank were under pressure at the fag-end of the last week. This was followed by an increase of two per cent by the SBP in bank reserve requirement and the perceptions of a cut in profit set the market trend for the new week trading.
The chief motivating force behind the current run-up was said to be the market talk of higher dividend and capital gains, Hasnain Asghar Ali said adding that both institutional traders and leading brokers were active buyers at current levels on selected counters enabling the market to maintain a steady posture.
The market, in part also derived its strength from the news of an imminent sell-off of some of the mega state-owned units including the PSO and the Global Depository Receipts (GDR) on the London Stock Exchange by the OGDC and the MCB.
News from the Lebanon front may not be that encouraging and investors may have to decide to go by attractive corporate baits or the undercurrent of global political developments, a leading analyst Faisal Abbas said.
The developing situation on the Middle East in the backdrop of a Syrian threat to step in if Israel launches ground attack on Lebanon could further aggravate the issue, brokers said.
The market, being highly sensitive to negative political developments seldom absorbs the negative undercurrent of turmoil and weighs down, they said.
The rollover week for matured July settlements passed smoothly as analysts earlier predicted that the sailing would be smooth, and that the selling may not assume an alarming proportion owing to a ban on short selling on this counter.
The gainers were led by Mustehkam Cement, Adamjee Insurance, the PSO, Shell Pakistan, International Industries, Pak-Suzuki Motors, Abbott Lab, Ferozsons Lab, the ICI Pakistan, Security Papers, the MCB Bank, the OGDC, Pakistan Petroleum, Pakistan Oilfields, National Bank, Nestle Pakistan, Rafhan Bestfoods and Rafhan Maize and several others.
Losses on the other hand were fractional barring the Clariant Pakistan, after an interim dividend of 50 per cent and Wyeth Pakistan, Thal Industries, the IGI Insurance, Zulfiquar Industries and Hino Pakistan followed them.
FORWARD COUNTER: Oil shares led the market advance on this counter, leading gainers among them being the Pakistan Oilfields, the Pakistan Petroleum and the OGDC.
Other actives including the National Bank, the MCB, the Bank of Punjab, the Fauji Fertiliser Bin Qasim, the PTCL and some others also rose amid modest activity.—-Muhammad Aslam
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