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| June 11, 2007 | Monday | Jamadi-ul-Awwal 25, 1428 |
Share market maintains upward drive
SHARE market maintained its upward drive as a judicious blend both of strong local and foreign buying and investors followed the general trend of buying and selling in oil, bank and cement shares.
However, unlike the previous national budgets, there were no speculative buying on any of the counters apparently in the absence of any “tax leaks or incentive leaks,” although price flare-up was witnessed on some counters, notably in foods such as Nestle Pakistan, Unilever Pakistan and Rafhan Maize and Rafhan Bestfoods in anticipation of speculation of food relief in the budget.
The KSE 100-share index established itself well above the barrier of 13,000 points at 13,274.87 points compared to previous 12,933.66 points, adding Rs90bn to the market capital at Rs3,857bn. The free float 30-share index also rose by 374 points at 16,771.80 points.
Stocks finished the pre-budget week on a higher note, what the analysts called the extension of previous run-up, but price flare-up was selective and was confined mostly to some overvalued counters.
Exit of some of the leading foreign investors after liquidating their long positions on oil and banking sectors kept the market in a bearish mood.
Due to some psychological depressants leading to political uncertainty, investors both local and foreign thought twice to go all-out for any share and did not close exit route, which is a normal practice among stock traders.
How the investors would react to the fiscal tax relief or corporate incentives, would be known during the post-budget sessions, but indications are that the current run-up would be sustained as in an election year and amidst prevailing tensions the government would not take any drastic tax measures, some analysts believe.
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After giving highly erratic movements, touching the week's lowest and the highest at 12,873.97 and 13,237 respectively, the KSE 100-share index finally managed to end with a sharp rise of well over 300 points.
The index may have ended with fresh fall, reflecting weakness of MCB, which has the largest weightage of 11 per cent in it but late active buying in it and other heavy weights including OGDC, National Bank, Hub-Power, allowed it to finish modest higher wiping out initial loss.
It is customary with the pre-budget market that investors are not inclined to take even a calculated risk as taxation proposals in a new budget are always deceptive.
However, if a well-connected broker having links in Islamabad managed to find cue of some of the incentives, he indulges in speculative buying on that counter and other follow him without ascertaining the real value of his adventure, some analysts said adding “the budget is always an unreliable document until its fiscal measures are officially announced”.
“The market appears to be in search of positive leaks about fiscal incentives in the national budget, but in the absence of any leak, investors played on both sides of the fence,”analysts said.
“No budget is tax-free even in the election year,” predicts a leading analyst. “Tax adjustments here and there are possible but the net burden in the form of higher inflation rate is always there”, he added.
Outlook of the future share business will be determined by the budget and the incentives and tax relief offered. Only the budget will determine where the index should stay.
FORWARD COUNTER: Barring PSO, which hit new highs over the week in response to its sell-off by the end of the current fiscal and soared well above Rs407, followed by MCB,which also maintained its upward drive to hit new peak levels, others ended mixed. However Bank of Punjab and some others fell modestly.
— Muhammad Aslam
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