|
|
|
| September 24, 2007 | Monday | Ramazan 11, 1428 |
Increase in oil price boosts KSE index
DESPITE a number of interruptions, share market last week managed to finish with an extended gain aided by strong covering purchases in the oil sector in response to a record rise in world oil prices above $82 per barrel.
Leaders among the oil giants erased a good part of initial gains, but together with other blue chips, including MCB, National Bank, Engro Chemical, they managed to add significantly to the index level.
The last two sessions of the week were a bit negative, but performance of the broader market allowed the index to finish with an extended gain.
After having braved a number of negative psychological factors and perceptions of political instability, the market added to the previous week’s gains thanks to the credible performance of the oil auto and insurance sectors.
The next trading week, however, could be crucial for future direction of the capital market as most of the constitutional, legal and political issues will be settled by the Supreme Court during the next couple of days.
The presidential election on Oct 6, and opposition’s vow to block it could cause law and order situation and the market may not remain immune to these developments and witness panic selling, some brokers fear.
How the contenders of power will react to them, the market will base its future trading on them, said a leading analyst Faisal A. Abbas.
The KSE 100-share index did breach through the barrier of 13,000 points over the week at 13,127.58 and managed to sustain it, but fears of political turmoil after the apex court’s verdict on the president’s dual office petition may lead to negative impact.
It finally finished at 13,065.17 points as compared to 12,779.68 a week earlier up 285.49 points as leading base shares reacted with the same speed as did they rise on the news of record increase in world oil prices, adding another Rs63 billion to the market capital at Rs3,808 billion. The free-float 30-share index also rose by 269.38 points at 15,707.13.
Click to view the larger image
The expected apex court ruling on the president’s two offices, announcement of date for the presidential election on Oct 6, and investors’ worries about Pakistan’s foreign currency ratings could work against the underlying sentiment possibly by the next week, market sources said.
Some others said snap price flare-up in the local oil shares caused by the steep increase in world oil prices did give instant boost to the market.
Trading on the share market on Monday resumed on a cheerless note amid fractional price changes as leading investors kept to the sidelines apparently awaiting the revival of institutional support, but there was a relative quiet on this front. The mid-week witnessed the return of the bull market aided by record increase in world oil prices.
“Though a bit late, I think the proverbial sluggishness associated with the holy month of Ramazan has made its silent debut”, said a leading analyst adding the “absence of big players reflects there may not be pleasant surprises in the sessions to come also”.
Most of the current favourites and volume leaders were neglected, while bulk of the support remained confined to second-liners where the risks were lower, he added.
Some others said leading investors were awaiting apex court’s verdict on the president’s dual office petition before resuming normal activity.
“It appears to be a judicious blend of moping operations of both the local institutional and selective foreign buying though it was essentially aiming at quick capital gains rather than holding on to long positions”, analyst Ashraf Zakaria said.
He said investment buying may not inflow in a big way until there is political uncertainty as no one would like put his saving in a market whose future direction is uncertain.
But some others said the market would continue to give an erratic performance despite the fact that basic fundamentals are terribly bullish based on higher dividend and future growth potential of the broader segment of issues.
“The market entirely is not guided by the strength of a bullish corporate regime. It has to work also in the framework of political background news”, analyst Ahsan Mehanti said adding “there are still more than one irritants, notably the presidential re-election, and opposition threat to resign en block from the assemblies to block the move and denying it the needed legitimacy”.
Hearing on the petition by the apex court on the president’s dual office started on Monday, and its ruling on the issue could have far reaching impact on the market and its future outlook, some others said.
However, analyst Hasnain Asghar Ali did not rule out the possibility of sharp flutters here and there in each session amid alternate bouts of buying and selling.
FORWARD COUNTER: Leading shares, notably OGDC, MCB, National Bank, Lucky Cement and some others finished with fresh gains but well below their week’s best levels on late profit-selling.—Muhammad Aslam
|
|
|
|
