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| June 04, 2007 | Monday | Jamadi-ul-Awwal 18, 1428 |
KSE index closes at 12,933 with a gain of 200 points
THE Karachi Stock Exchange 100-share index last week breached through the psychological barrier of 13,000 points, but failed to sustain it on weekend selling amid briskly traded sessions throughout the week.
Higher volumes, above 400 million shares, after several months reflect judicious blend of both local and foreign buying which could keep the market bullish at least until the budget, after that the market will take its course according to fiscal incentives.
Analysts predict the index could set fresh all-time high records during the sessions preceding the national budget on June 9 as pent up foreign demand still remains unsatisfied.
The barrier of 13,000 points at 13,040.09 was briefly broken but weekend selling again pushed it below this level. However, the underlying sentiment remained uppish.
What seems to have triggered fresh buy-stops on the bank, oil and cement sectors was the snap advent of foreign buying and the lead was judiciously followed by leading brokers and institutional traders leading to the current buying euphoria.
The KSE 100-shares index closed this week at an all-time peak level of 12,933.66 points as compared to previous of 12,732.41 points, showing a massive rise of 201.25 points, adding Rs56bn to the market capital at Rs3,768bn.
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A section of leading analysts, however, doubt the market’s ability to sustain the current price flare-up as some of major depressants, notably political uncertainty and judicial crisis, could take steam out of it any time.
“Despite having history of major crashes, including the March 2005 which wiped out $12 billion from the savings of small investors to its credit, speculative forces are out to push the index to new heights”, sources said adding: “They certainly may have sound reasons to be that bullish”.
The advent of strong foreign and local buying on selected counters may not be called a pre-budget buying euphoria followed by positive signals from relevant quarters, it may have to its credit some “insider information”, some analysts said.
“It would not be a miracle if the index touches 14,000 points level in the pre-budget sessions”, a leading analyst Ashraf Zakria says. “Despite political tensions positive market fundamentals reinforce this perception”, he added. However, index’s march to its next target was not that smooth as bears intercepted it more than once during the session. It was later pulled down from the week’s high of 13,040.09 points to close lower on profit-selling.
Oil, cement, bank and fertiliser shares witnessed a massive buying, notably from some of the leading foreign investors followed by local and institutional buying on selected counters.
“Foreign investors seem to be encouraged by the prevailing EPS ratios, and growth factors in the form of capital appreciation and have re-entered the market in a big way apparently ignoring the likely impact of judicial crisis on the share market,” another analyst Ahsan Mehanti said.
Together with some positive news from the budget front including fiscal incentives for the trade and industry and market talk of cut in Capital Value Tax (CVT), the advent of strong foreign buying has changed the entire future share business outlook, a leading analyst Faisal Abbas said.
“I don’t call it a speculative price flare-up”, he said adding ”corporate earnings, potential of higher payouts and capital gains do not allow investors to take note of some of the lethal depressants”.
For the third time during the last couple of sessions, the volume crossed the level of 400m shares and this reflects stock market’s undercurrent and investors’ perceptions, some others said.
FORWARD COUNTER: Steep rise in MCB highlighted the trading on this counter, which finally closed around Rs350.25 from its previous of Rs326.30. National Bank, Bank of Punjab and Askari Bank also increased.
Cement and oil shares followed them, notable gainers among them being D.G. Khan Cement and Lucky Cement. OGDC, Pakistan Oilfield and PSO also rose and so did Engro Chemical and Bank Alfalah.
— Muhammad Aslam
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