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| May 28, 2007 | Monday | Jamadi-ul-Awwal 11, 1428 |
KSE 100 index breaches psychological barriers to settle at 12,700
THE Karachi Stock Exchange 100-share index breached three psychological barriers during the last week as a judicious blend of both local and foreign buying drove bears out of the market at least for the near-term.
The breach of barriers of 12,500, 12,600 and 12,700 in a week is a significant development and reflects that investors are toeing the line of higher corporate earnings, a good national budget and an active presence of foreign fund buying.
The market derived its strength from rumours that a high-powered KSE delegation will meet the prime minister seeking his intervention to resolve the CFS issue, which had already touched its upper ceiling of Rs55 billion.
Speculative buying based on the perception that the CFS limit may be raised to Rs65 to Rs70 billion did not allow investors to lay their guards and they continued to build-up positions on selected counters.
The share market, therefore, staged a broad-based rally as both local and foreign investors made an extensive buying at lower levels almost on all blue chip counters.
The KSE 100-share index, which earlier showed either-way movements surged to new all-time high so far at 12,732.41 points, up by 392 points. Its junior partner KSE 30-share index also rose by 609.86 at 15,897.01. The market capital swelled by over Rs100.00 billion at Rs3,713 billion.
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Market's mid week snap rally boosted by active short-covering in oil shares followed by reports of increase in world oil prices and sympathetic earning-based covering purchases on other counters, notably leading banks showed that it had the will to rise further in normal trading conditions.
“Essentially, it was an institutionally-based rally which was later joined by foreign investors”, said a leading stock analyst Faisal Abbas. He said: “Tired institutions could not sit idle on their heavy liquid cash, and resumed normal business at lower levels”.
Another analyst Hasnain Ali Asghar hopes that the snap rally could be sustained in coming sessions also, but has doubts as background news from different fronts are not positive.
But Tuesday's snap rally gave a pleasant surprise to most of the leading market players awaiting clearer picture on the corporate thinking in coming sessions, he added.
However, bad news both from political and law and order fronts are following in quick successions which is not allowing investors to plan a long-term portfolio adjustment strategy, says analyst Ashraf Zakaria and adds : “everybody is awaiting to invest after the political dust settles down.”
The perception that the index will settle somewhere well above the level of 13,000 points despite developing political situation as investors will think twice to invest even at the falling prices. But some others said it has already survived the shock and is well on the road to set new record.
“There is more than one reasons, which could have bearish impact on the share market in the coming weeks, the main among them being a perception of political uncertainty”, analyst Ahsan Mehanti said and added “all political indicators originating from official and private sources are terribly bearish”.
FORWARD COUNTER: Leading shares on this counter followed the lead of their counterparts in the ready section and mostly finished with fresh gains, major gainers among them were MCB, National Bank, OGDC and Bank Alfalah.—Muhammad Aslam
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