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| April 23, 2007 | Monday | Rabi-us-Sani 05, 1428 |
KSE index remains at 12,091 despite weekend selling
SHARE market extended previous week's run-up but with clipped gains as late profit-selling pushed some of the blue chips to close well below their best levels in the recent past.
The selling at the fag-end of the week was triggered by reports that the SECP has refused to raise the CFS ceiling from the current Rs55 billion as requested by the KSE, apparently to check speculative activity.
But investors’ worries over liquidity problems for the next couple of weeks as the current CFS investment is close to the limit of Rs55 billion, caused selling pressure on some of the leading stocks, notably OGDC.
The KSE 100-share index consolidated well above the psychological barrier of 12,000 points as leading base shares remained in strong demand both from the local and foreign investors on the strength of higher corporate earnings.
After having set all-time high records both in terms of index level and market capital at 12,189.29 and at Rs3,519 billion, the market attracted weekend selling but the undertone remained inclined upward.
The weekend closing was a bit lower at 12,091.53 for obvious reasons as compared to previous week's 11,977.74 points, showing fresh increase of well over 114 points. The KSE 30-share index also finished with an extended gain of 85 points at 14,994 points.
The KSE 100-share index again breached the barrier of 12,000 points on active buying in cement and banking shares ahead of their board meetings and market talk of higher dividend but failed to sustain the peak level on late selling.
Analysts, however, differ over the future outlook of these stocks. Some say it could rise further as the corporate results season has just begun. There are rumours that most of the leading companies, whose financial year ended on March 31, or those whose quarterly profits are much higher, are coming up with higher final dividend or interim bonus shares.
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NIT unit prices were also revised upward by Rs1.70 and Rs1.60 for sale and repurchase respectively at a record high of Rs55.15 and Rs53.20 in response to talk of its pre-bid meeting.
Some others said the memories associated with the figure of 12,000 points are terribly bitter as it generally follows a massive crash as in March and June last year after having crossed the Rubicon.
However, the breakthrough has come after a year of erratic wandering but was outstanding in more than one ways against its previous meteoric rise to all-time high index level at 12,336 hit in March 2006.
“But the current feat is more important as it came in the prevailing charged political atmosphere, having in its fold a lot of psychological depressants, reminiscent of March 2005 and June 2006 market crash of 32 per cent”, analyst Hasnain Asghar Ali said.
In June last year, the market received massive battering followed by negative rumours including default of some members, and at one stage fell below the resistance level of 10,000 points, he added.
In 2006, three major corrections were noted, one in March of 10 per cent, followed by 35 per cent and 15 per cent in June
The fact that investors both local and foreign followed the positive market fundamentals rather than toeing the line of uncertain political conditions and conflicting rumours, reflects that market players seem to have decided to go along led by the corporate, analyst Ahsan Mehanti said.
But opinions are divided over its future direction. Some predict it could build-up strong base above this levels but some others think the prevailing political situation may not allow to keep above this level as weaker links of the strong bull lobby could resort to profit-selling any time in an overbought market.
The rally this time was led by the cement sector followed by banking and oil shares, strong presence of foreign fund buying was being considered the main stay behind the current price flare-up, some others said.
FOTWARD COUNTER: Leading shares on this counter also followed the lead of their counterparts in the ready section and ended with fresh gains, major gainers among them being Bank of Punjab, National Bank, Askari Bank, OGDC, Pakistan Petroleum, Lucky Cement, D. G. Khan Cement, Bank Alfalah and many others. — Muhammad Aslam
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