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| September 25, 2006 | Monday | Ramazan 1, 1427 |
Bourses cheer up on SECP move
EXTENSION of one-month in the in-house Badla financing facility gave the much-needed push to a dull stock market last week. Investors covered their position at lower levels on all the active counters under the lead of bank and oil shares.
Another contributory factor at the Karachi Stock Exchange was the announcement of higher dividends plus bonus shares by some leading companies, notably in the textile sector. This did not allow the investors to sit on the sidelines and leading among them remained active buyers at prevailing prices.
The investor-perception of the future market outlook, however, was not clear as the month of Ramazan generally gets linked to severe sluggishness sans active speculative activity.
The stocks, therefore, limped back to normal trading as investors were back in the arena after the Security & Exchange Commission of Pakistan (SECP), accepted some major demands of the bourse’s which led the sanity in daily trading.
The extension in the in-house Badla financing and conditional permission of short-selling in the forward November settlements provided the necessary encouragement to investor-morale which propelled some to flood the market with buy-stops.
The KSE 100 and 30-share indices finished higher by 322.18 points at 10,306.75 and 12,856.20 as compared to the previous week’s 9,984.57 and 12,401.20 points, respectively.
But the leading analysts were divided over positive fallout of the two SECP moves. The big question being debated was: What next, if the trapped parties were unable to square their outstanding positions in the extended period?
The month of Ramazan was expected to take its toll as some brokers refrained from indulging in speculative trading. All three, the range of stocks that came in trading, price movements, and the volumes generally fell to modest proportions throughout the month.
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The extension apparently played the role of a major market rescuer which had been in search of an instant stimulant for the last couple of weeks in falling volumes and lack of investor-interest.
This however, was not the only positive news which lured investors back into the market. There were some other contributory factors as well, like the higher dividends and optimism that prevailed ahead of President Musharraf’s meeting with the US President.
Bank and oil shares virtually raced toward their pre-reaction level on strong short-covering at lower levels and evoked a lot of fresh buying on other counters where the chances of capital gains were brighter.
Another aiding factor was the ban by the KSE on short-selling in the future October settlements which more than once had caused the market to crash because of the inability of investors to square up their outstanding position, brokers said.
It was a pre-Ramazan boost to normalise trading in share business, stock analyst Ashraf Zakria said adding that the positive outcome of President Musharraf’s meeting with his US counterpart was likely to reinforce the investor-perception of a political stability.
But some others said that the other two sessions preceding Ramazan were more rewarding both in terms of capital gains and normal volumes. Leading analysts said that there could be 30 per cent decline in daily activity in the absence of speculative trading during the holy month.
There may be bullish flutters here and there based on the incoming Board meetings but the general trend was expected to remain sluggish.
Prominent gainers were led by the Packages, Wyeth Pakistan, Dawood Hercules, Treet Corporation, National Refinery, the MCB, National Bank, Unilever Pakistan, Nestle Pakistan, while the losers were led by the AKD Securities, Arif Habib Securities, the IGI Insurance and some others. But some recovered their early losses on mid-week rally.
FORWARD COUNTER: Both, the National Bank and the MCB initiated a rally on this counter, both virtually racing toward their pre-reaction level on strong support from all quarters.
The OGDC, the Pakistan Petroleum, the Pakistan Oilfields, the D.G. Khan Cement, PICIC and Nishat Mills followed them on active follow-up support and finished with smart gains.—Muhammad Aslam
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