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THE Karachi Stock Exchange 100-share index last week confidently stood well above the recently broken psychological barrier of 12,000 points despite some massive jolts in between as positive news on the corporate front did not allow investors to leave the arena.
Leading bulls assisted by some foreign investors are eyeing the widely speculated index level of 14,000 points during the next couple of weeks if all goes well with the Saturday’s massive rallies by lawyers and the MQM in a highly charged atmosphere.
According to some leading foreign investors, oil, bank and cement shares at current levels still provide them attractive bait for enhanced capital gains as well as are ideal for long-term investment.
Despite early week massive shakeout caused by fear of imposition of emergency, the share market managed to pull itself out from the initial lows but failed to make further gains as widely speculated, owing to sudden change in the backgrounds leading to the absence of foreign investors.
After official denial with regard to imposition of emergency, the market did recover from the early lows and sustained the index level above the barrier of 12,000 points, but bull-run faded under the cross–current of negative news.
The KSE 100-share index managed to finish well above its weekly low of 12,079.75 at 12,367.62, off 144.46 points on strong mid-week short-covering at the lower levels, trading volume showed a sizable contraction. The market capital also suffered a fall of about Rs42 billion at Rs3,601 billion. The KSE 30-share index was off 293.01 points at 15,663.38.
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“The sanity to stock trading is expected to return by next week as some of the steps taken by the Supreme Court to defuse the prevailing tension between the contenders of power on the judicial crisis are expected to reduce the tension”, a leading analyst Hasnain Asghar Ali, said.
Although the corporate results season for the quarter ended March 31, is over, but investors are lining up stocks of those companies whose board meetings are due, higher capital gains being the motive behind the fresh covering.
Oil, bank, cement and leading shares on some other counters are expected to lead a decisive recovery beyond the index level of 12,000 points possibly by next week.
The chief inhibiting factor behind the relative slow down in the share trading was fears linked to the Supreme Court Chief Justice’s arrival in the city and MQM’s rally on the same day and rumours of violence.
But as far as corporate fundamentals are concerned they are positive and the market is capable of resuming its upward drive beyond the recently established all-time peak index level of 12,512.08 by next week if all goes well with the Saturday’s rallies.
Earlier, the KSE index crashed from the recent all-time high of 12,512 points by 432.33 points or 3.43 per cent at 12,079.75 points on massive selling triggered by fears of imposition of emergency and that the SECP has sought rationale behind the proposed increase in CFS limit.
It was the current year’s biggest single session plunge but not all-time lower as it has had already fallen by 468 points in March 2005 crash and 491.02 points or 4.43 per cent on March 8, 2006 on selling fuelled by tax on shares.
But what seems to have accelerated the pace of early panic selling was heavy unloading by foreign investors on the perception that massive welcome to the Supreme Court Chief Justice during his Saturday’s Lahore visit could lead to political uncertainty.
“It was, however, not a single factor behind the market plunge”, analyst Ahsan Mehnati said adding a hint by the prime minister about imposition of emergency had also contributed to the fall.
But some others said it appears to be brokers’ manoeuvering or a silent protest to SECP refusal to accept their demand for the increase in the existing CFS ceiling of Rs55 billion to Rs65 or Rs70 billion to meet the growing market demand.
All the leading base shares fell in unison under the lead of OGDC, National Bank, Pakistan Petroleum, D. G. Khan cement, and Bank of Punjab but most of them recovered and some even higher from early lows on strong short-covering at the lower levels.
Forward Counter: Barring Nishat Mills and some others, which managed to finish modestly higher on active short-covering, all leading shares fell on profit-selling.
Leading among the losers were OGDC, Pakistan Oilfields, Pakistan Petroleum, National Bank, MCB, Bank Alfalah and Fauji Fertiliser Bin Qasim.—Muhammad Aslam
