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| February 12, 2007 | Monday | Muharram 23, 1428 |
Stocks in tight bull grip for 7th week
AS predicted by some leading analysts, the KSE 100-share index last week briefly breached through the psychological barrier of 12,000 points but failed to sustain owning to weekend profit-selling. The underlying sentiment remained moving up.
Opinions are divided over the future direction of the index. Some believe it could rise well above the previous all-time high level of 12,236 point after due corrections but some others say the developing situation on the law and order front in the backdrop of suicide attacks on high-security zones could keep it within current levels.
Other negative factor is the market's highly oversold position as right from the beginning of the New Year, it did not look back and continued to add on an average about 500 points each week to the index.
Stocks, for the 7th week in a row, remained in tight grip of bulls as investors were not inclined to take even a technical breather in a highly overbought market. No one among them was in a mood to miss an attractive bait of instant capital gains.
The KSE 100-share index finally posted a sharp gain of 255.01 points at 11,844.65 as compared to 11,589.64 and so did the KSE 30-share index at 15,023.93 points. Most of the leading base shares including PTCL, which rose to its new highs, National Bank, MCB, Pakistan Petroleum and Pakistan Oilfields and some others finished higher despite weekend selling.
The increase in the market capital to $54 billion indicates that the market has reached the required depth for the foreign fund portfolio investment, a good part of which has already found its way into some leading shares under the lead of MCB and Pakistan Petroleum.
Impressive rise in daily volume figure to a year's high at 467 million shares shows that buying is a judicious blend of both local and foreign investment.
Analysts said worries about the massive leverage positions in some of the leading shares were there after the CFS figure crossed the limit of Rs52 billion.
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The hallmark of the week's trading was strong intra-day profit-selling in an apparent effort to avoid a massive overdue correction.
Leading investors take new positions early in the session and liquidate at the pre-determined higher level and again buying at the dips, leading to new experiment of intra-day trading, without causing major dents in the prevailing prices.
“The new trading pattern shows it would be pretty difficult for the bears to push the market down before it attains it new short-term target of 12,000 point index level”.
Earlier, trading resumed on a higher note after Monday's closure on account of Kashmir holiday as leading shares finished further higher under the lead of banking sector on renewed buying.
“No one could deny the fact that the market is now in a highly overbought position after last six weeks sustained run-up and needs correction”, a leading analyst Ashraf Zakaria said. “But it is pretty difficult to say about the size of correction after 2,000 point rise”.
But Ahsan Mehanti says the best of the corporate announcements are still to come and a brief interruption may not cause any major dents in the current price levels.
He said buying offers both from the locals and foreign investors have not dried up and dips on selected counters could attract any amount of support aimed at capital gains.
“I don't think bears could drive the market down from the current levels before the end of next month as there will a lot of stimulants in between to sustain the investor interest, notably higher payout and bonus issues”, another analyst Faisal A. Rajabali predicts.
Moreover, technical correction is essential for the market’s health as they adds to its inherent strength rather than halting its upturn, he said.
FORWARD COUNTER: Barring OGDC, which remained under pressure and fell modestly lower, speculative issues on the cleared list were quoted higher under the lead of MCB, which established it new carrier-best level around Rs320 but late selling allowed it close with clipped gains.
Other actives, notably National Bank, PTCL, Pakistan Petroleum, Pakistan Oilfields, D.G. Khan Cement and some others also finished with an extended gain.
—Muhammad Aslam
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