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| January 08, 2007 | Monday | Zilhaj 17, 1427 |
STOCK EXCHANGE: New Year dawns with a promising note
STOCKS resumed New Year trading on a promising note leaving far behind the sluggishness of the eventful year as leading investors and foreign funds based their future buying strategy on the prevailing attractively lower levels, notably in the oil sector considered an envy of foreign investors.
But daily trading volumes failed to keep pace with the mounting buy stops in an Eid holiday shortened week as sellers were not inclined to sell anticipating further increase in prices.
There could be technical corrections here and there but the general perception is that the market would behave orderly on the strength of higher corporate announcements at the current lower levels.
As a result, stocks opened the New Year account on a bullish note signalling that there are more than one reasons to be optimistic about the future market outlook despite the presence of a number of political depressants.
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Being in a highly oversold position on technical ground alone, the market could attract any amount of covering purchases on the blue chips counters as both the leading investors and the punters are not inclined to miss to ride the bull bandwagon ensuring handsome capital gains.
But the most inspiring factor behind the sustained bull-run would be the advent of foreign fund buying just around and is expected to target the leading index shares in the banking and oil shares.
“The market has already been left far behind during the three new years trading sessions and has given a fair indication of its future trend based on technical and corporate grounds”, analysts said.
Dividend announcements have already started pouring in from the sectors whose financial years ended Dec 31, 2006, notably banking, sugar and cement, which are on the higher side of the analyst predictions.
The lure of an average dividend yield around nine per cent during the New Year could well prove an attractive bait for both the local and the foreign buyers and this factor could sustain the market's bullish trend, they said.
The New Year trading resumed on an optimistic note as in a short-post Eid holiday week witnessed a lot of covering purchases on selected counters. But fractional either-way price changes reflect that institutional traders and foreign funds are still in the process of re-fixing their New Year investment priorities and may resume normal activity possibly by the next week.
The New Year debut was, however, fairly promising, signalling that the memories of the sluggish December may now have no relevance to the unfolding new year corporate scenario.
The notable feature was that trading resumed in the share of Callmate Telips after the ban imposed by the SECP for violation of listing rules was lifted. Its share was traded lower at around Rs71.
Although volume figure failed to expand to a respectable total as much of the time was consumed in exchanging Eid greetings between brokers and investors but an air of optimism prevailing in the trading hall reflected that the New Year trading could spring many a pleasant surprises.
Bulk of the stray covering purchases remained confined to bank, barring National Bank, leading oil and cement shares, notably MCB, OGDC, Pakistan Petroleum, Pakistan Oilfields and PSO.
Analysts said oil and bank shares were expected to play a pioneering role in putting the market back on the rails ably assisted by the cement sector.
“The current lower level attained by most of the overvalued counters could well be an envy of any foreign fund, which had been shy for the last couple of weeks”, they said “but now the deck is clear and there will be a lot of bull roar during the coming sessions”.
“The investors are expected to get better return on their investment during the current year from the last year's five per cent as attractively lower reached by the leading base shares ensure higher capital gains”, some others said.
A leading stock analyst Faraz Farooq predicts that National Bank, Bank of Punjab, OGDC, Pakistan Oilfields, and PSO, what he calls five picks, could be on the top of surging stocks during the New Year.
FORWARD COUNTER: National Bank and MCB came in for active short-covering on rumours of bonus shares and ended sharply higher from the recent lows but are still far below their best levels.
Oil shares also recovered from the recent lows barring OGDC and so did cement shares and some leading shares on the other counters.
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