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| January 01, 2007 | Monday | Zilhaj 10, 1427 |
Cautious optimism on the bourses
THE KSE 100-share index managed to finish above the crucial level of 10,000 points despite a number of interruptions both technical and political and indications are that the bullish outlook will be carried to the new year trading.
The year that has just passed into history was eventful by more than one ways as it allowed the market to survive many a crisis including the crash of June followed by a robust recovery.
During the year, the KSE 100-share index twice fell below its chart point of 10,000 but only to attain the crucial level of 10,000 on the strength of leading shares. But it is not a game of numbers but inherent strength of the market and the index, which counts and speaks of its relative strength.
The fact that the index managed to finish well above the 10,000 level (base 1,000 points), signals that it was not that bad year in terms of dividend yield or capital gains. The market finished the year well above most of the emerging Asian markets, although a number of reforms including switch over to CFS from the decade old badla financing system took its toll.
Unlike previous years, stocks finished the eventful year on mixed note but the rally was too feeble to be carried over to the next trading year. In previous Decembers, the market has not been so sluggish as it was during the fading year as technical worries including overleveraging on the CFS counter never allowed investors to make speculative buying at the attractively lower levels, notably on the banking and oil sectors.
“The flashes of year-end buying were witnessed on selected counters but they never allowed investors to make them base for the new year portfolio-building”, leading analysts said.
The relative quiet on all the counters was attributed to year-end closing operations by the leading brokerage houses and financial institutions but some others said it was not that easy to fathom investor perceptions about the new year despite predictions of higher corporate dividend and bonus shares.
However, it goes to the credit of leading investors and institutional traders to keep it well above the index level of 10,000, a massive rally built-up on June market crash and the on-going probe on it.
Earlier, in January it was quoted close to its all-time peak level of 12,236.00 points and held on the crucial level of 10,000 points barring in June crash and in December when it fell below it owing to the absence of strong local and foreign support.
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The KSE 100-share index was up by 146.51 points at 10,040.50 and maintained the index level of 10,000 points as leading shares, MCB, National Bank, PTCL, Pakistan Petroleum and Pakistan oilfields staged smart rallies early but finished well below their early rise on late selling.
The breach of the psychological barrier at the closing session of the year reflects that bulls are inclined to carry it into the new trading year well above the recently established level of 10,000 points.
“Though a bit late flashes of year-end buying were there”, says a leading stock analyst Ashraf Zakria adding the technical rally could be carried through the next couple of sessions of the fading year”.
The market had fallen well over 650 points during the last week on selling prompted by combination of negative factors, notably worried linked to rollover week, overleveraging on the CFS market and the absence of buying support from the big ones and needed correction on technical grounds, another analyst Ahsan Mehanti said.
But light volumes reflect bears held on to their positions for obvious reasons as they were not inclined to sell at the lower levels those stocks, which they had purchased at higher levels.
“The modest turnover figure reflects the absence of institutional support and portfolio gaps were filled in mostly by the general investors”, he added.
Most of the fundamentals, notably from the corporate front are bullish as the new year could witness a flurry of higher payouts from those companies whose financial years are ending on Dec 31. Already sugar sector is giving pleasant surprises to the analysts.
“There could be a modest pressure on the market owing to seven-day CFS owing to Eid holidays but there is no possibility of any major setback to the existing trend”, analyst Faisal A. Rajabali predicts.
FORWARD COUNTER: Over the week, speculative issues gave an improved performance and rose under the lead of MCB, Pakistan Petroleum, D.G. Khan Cement, and some others and finished with good gains. National Bank were leading among the losers.—Muhammad Aslam
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