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| September 17, 2007 | Monday | Ramazan 04, 1428 |
Stocks stage recovery on strong institutional support
A STRONG mid-week rally again put the share market back on rails as institutional traders covered positions at the attractively lower levels on blue chips counters and lured others to ride the bandwagon.
The smart snap rally initially appeared inspired. But as it gained in stature, each session and the index raced to its pre-reaction levels, and all and sundry joined the race for good reasons.
The perception that the recovery was based on a combination of positive factors generated a lot of genuine and speculative buying at lower levels on selected counters, ensuring higher capital gains. There was a virtual run on some of the leading shares. As a result, the market emitted bullish sparks despite weekend selling.
The buying euphoria may well be judged from the fact that the KSE 100-share index was again knocking at the target of 13,000 points. Leading base shares are virtually racing towards their pre-reaction levels under the lead of oil, bank and cement shares.
It finally ended around 12,779.68 as compared to previous 12,406.71 points, up 372.97 points on active follow-up support, adding a hefty Rs143 billion to the market capital at Rs3,745 billion.
The rally was initiated apparently by the deportation of former prime minister Nawaz Sharif to Saudi Arabia, on the perception that exit of one of the contenders of power may restore sanity to stock trading.
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“Essentially, it appears to be a dividend related run-up as cash dividend and bonus shares were pouring in each session which did not allow investors to leave the arena”, said analyst Ahsan Mehanti”, adding “no one among them was inclined to miss the rising market, the future growth potential being the chief attractive bait”.
The KSE, therefore, staged a smart recovery on strong institutional support aided by deportation of the former prime minister to Saudi Arabia. But earlier it appeared to be a snap-engineered run up, having no relevance to ground realities, analysts said adding it was well-sustained in the subsequent sessions.
However, political uncertainty is there, analysts said. Deportation of the former premier only ends the one phase of the issue, what the others will have no one could precisely predict at this stage, the added.
The opening of the market was highly volatile as investors played on both sides of the fence indulging in alternate bouts of buying and selling fearing law order situation after the landing of the former premier in Islamabad early in the morning. “The index earlier showed violent either-way movements awaiting some positive news from the Sharif front”, said a leading analyst Faisal Abbas.
The rally, which seems to be inspired, could extend itself for another couple of sessions but many analysts termed it a manipulated one to show that the “Sharif episode” was not relevant to ground realities.
“The deportation issue could lead to another legal battle in the apex court in the coming days as there is a loud whispering about a contempt of court case in political circles”, they said.
After initial nervousness, share values resumed their sustained upward drive and finally ended with smart rallies on all counters amid brisk trading.
FORWARD COUNTER: Although well below the week’s highs, leading speculative shares on the forward counter on balance finished on the higher side amid alternate bouts of buying and selling. Some of the leading oil and bank shares remained in strong demand and ended with fresh gains. The MCB, National Bank, Pakistan Petroleum, Pakistan Oilfields, Lucky Cement, D. G. Khan Cement and OGDC were leading among them.
—Muhammad Aslam.
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