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| September 04, 2006 | Monday | Sha'aban 10, 1427 |
KSE’s 30-share index makes a firm debut
The Karachi Stock Exchange’s new 30-share index made a firm debut at the fag-end of last week overshadowing the performance of the existing two. Analysts have predicted that it would provide effective guidelines to prospective investors in the weeks to come.
But investors were a bit confused after its initial launch and could not precisely decide which of the trio indices, the new 30-share, the 100-share or the all-share to follow before making fresh commitments on any of the counters.
All three finished higher thus reflecting the strength of their base shares.
The stocks last week confidently demonstrated their inherent strength in the backdrop of more than one psychological depressant and bounced back to their coveted level of 10,000 on the dividend-related buying.
It was in this background that the 30-share free-float index made its debut at the fag-end of the week and finished with a smart rise of 175.51 points at 12,515.87 (base 10,000 points).
It was dominated by most liquid equities in the private sector instead of the previous state-owned units whose floating stock was short in the open market.
Headed by the MCB (weightage 11.6 per cent) and some other leading banks, the new index was expected to fully reflect the state of the capital market.
It will provide guidance to investors to make fresh commitments or to exit, leading brokers said.
The KSE 100-share index finished the week with a sharp gain of 586.18 points at 10,170.97 as compared to previous 9,584.79, adding Rs120 billion to the market capital at Rs2,849 billion.
The news that the Prime Minister had survived Opposition’s no-trust motion apparently overshadowed the negative fallout of the killing of former Governor of Balochistan Sardar Akbar Bugti, some analysts said.
But the volume figures shrank owing to the Friday’s general strike called by the Opposition parties to protest the killing of Sardar Bugti which has created law and order situation in Balochistan and some other parts of the country.
Fresh corporate announcement over the week, notably by the Pakistan Oilfields, PICIC, Indus Motors, Attock Cement and Attock Petroleum evoked good interest on the selected counters.
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After having plunged by 1,000 points last week, the KSE 100-share index staged a massive rebound on strong short-covering in leading shares at the attractively lower levels.
It appears that the market has ignored the two predictions of analysts by responding to its technical demand.
It was assumed that the market would take another heavy battering on the resumption of trading on account of the negative fallout of the killing of former Balochistan Governor in an army action, and the tabling of a no-trust motion against the Prime Minister.
The bulk of support originated from the financial institutions which have enormous funds at their disposal to intervene in a falling market to put it back on rails, they said.
An idea of a buying-flurry at attractively low levels may well be had from the fact that all leading base shares closed around their upper locks.
The OGDC, the MCB, the National Bank, the Pakistan Oilfields, the Pakistan Petroleum were leading the lot.
A section of leading investors was a bit surprised over the grand recovery in an atmosphere in which everyone appeared worried by asking ‘what next’, analysts said.
But some others claimed that the rally appeared genuine and was initiated by a group of leading brokers in an effort to demonstrate that the no-trust motion against the Prime Minister or the death of Bugti had no relevance to basic market fundamentals.
However, none could deny the fact that the market was in a highly oversold position owing to the last week’s massive sell-off and needed correction which came in at a time when the background news were all in the negative, they added.
Next couple of weeks would show whether or not the rally is real or inspired but indications are that the heating up of political scenario will continue to have negative impact on the market’s future performance, some others said.
FORWARD COUNTER: After initial weakness, leading shares managed to finish fully recovered on strong speculative buying at lower levels.
The MCB, the National Bank, the Pakistan Oilfields, the Pakistan Petroleum, the OGDC, the D.G. Khan Cement were leading among them. Others also increased modestly.—Muhammad Aslam
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