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| October 09, 2006 | Monday | Ramazan 15, 1427 |
100-share index moving towards 11,000-point level
THE 100-share index at the Karachi Stock Exchange was confidently inching towards the crucial 11,000-point level with analysts believing that its more than 400-point increase for sixth consecutive week was reflective of a goal not very elusive.
The index could look well beyond its previous all-time peak level of over 12,000 points if all goes well with the current market fundamentals as there was no turmoil on the political front, they predicted. It had risen by 10 per cent during the last three weeks.
The market capital which had risen to well over Rs3 trillion during the week from its low of Rs2,800 billion was also heading to its pre-reaction level of Rs3.3 trillion, hit last year.
Stocks maintained their upward drive last week as a dividend-driven rally further intensified on market talks of the presence of strong foreign fund buying in banking sector followed by reports of straight buyouts on the pattern of the recently sold Union Bank.
The latest target of foreign investors was said to be another small but a listed bank, the Prime Bank. The ABN AMRO being bidder had moved forward the talks, perhaps to an advance stage.
There was more positive news, including the official reports of listing of the Global Depository Receipts (GDRs) of the OGDC, the MCB, Habib Bank, United Bank and National Bank on the London Stock Exchange possibly before the year was out. This further reinforced the investor-confidence in the future share business followed by massive covering purchases.
The KSE 100-share index stood above the crucial level of 10,500 points at 10,926.91 as compared to 10,512.48 points a week earlier as leading base shares tended further higher, up 414.43 points over the week.
The stocks resumed the trading on an encouraging note as investors made active covering and speculative buying in half a dozen small banks ruling at an attractively lower level triggered by the reports of merger and acquisitions in the backdrop of foreign support.
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Earlier in the trading, some were traded around the upper locks of their circuit breakers notable among them were the Faysal Bank, the Bank Alfalah, PICIC Commercial Bank, the National Bank and the Khyber Bank. But late selling allowed them to close with clipped gains.
The market witnessed a good bit of bargain-hunting in selected shares aided partly by the extension in in-house financing facility up to November 30. The dividend-driven buying in bank and cement shares also proved a supporting factor to sustain the early run-up.
There was a perception that there will not be any shortage of fund at cheaper rates as the Continuous Funding System (CFS) amounting to Rs55 billion will be fully operative by the expiry time of the in-house financing, analysts said.
The opening of the National Saving Schemes for non-banking institutions could leave a negative impact on the future share business. Taking long-term view of the official move, investors relied on other aiding news and did not take its negative view for the near-term, stock analyst Ahsan Mehanti said.
Investors, apart from higher corporate announcements including the cash dividend and bonus shares by some small group of companies and reports of encouraging interim earnings, were also enthused by the reports of foreign interest in some local banks, notably sponsored by foreign investors, stock analyst Zia Javed said.
The Union Bank sell-off recently to the Standard Chartered Bank seemed to have opened floodgate of foreign offers for some others which may necessarily not be operating in the red but because of other reasons, he added.
According to market sources a higher competition in local banking system and a massive rise in reserves and earnings in leading banks had pinched the smaller ones of their limited manoeuvring capacity.
However, the new oil and gas finds are expected to keep oil sector in a positive mood in coming weeks irrespective of the sluggishness associated with the holy month of Ramazan.
It was perhaps for the first time that the stock market emitted bullish sparks during this holy month as investors could not ignore an attractive bait of positive news following in quick succession, said a leading stock analyst Faisal Abbas
Gainers were led by the Pak-Suzuki Motors and the Lakson Tobacco followed by the National Bank, the MCB, the IGI, the Dawood Hercules, the United Bank, the Pakistan Cables, the Colgate Pakistan, the OGDC, the Pakistan Petroleum, and the Millat Tractors.
Top losers included the Wyeth Pakistan and the Nestle Pakistan. Other prominent losers were led by the Premier Sugar, the Jahangir Bank, the National Refinery, the Pakistan Engineering, the Mitchell’s Farm Fruits, the National Foods and the AKD Securities.
FORWARD COUNTER: Speculative issues on the forward counter also rose sharply on strong support of the MCB, the National Bank, the Pakistan Petroleum, the OGDC, the D.G. Khan Cement, the Bank of Punjab and some others being leading gainers.—Muhammad Aslam
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