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| October 17, 2007 | Wednesday | Shawwal 4, 1428 |
Foreign, institutional buying sets market capital record
NEW records, both in terms of index level and market capital, were set up on the Karachi Stock Exchange during the previous week as judicious blend of local institutional and foreign buying did not allow investors to take even a technical breather.
The sky may not be the limit, but the KSE index at 14,463.78 and the market capital at Rs4.4 trillion without any significant pullback in a highly overbought market indicates that the best is still to come.
The KSE 100-share index soared to an all-time high level of well over 14,500 points and analysts predict its new target could be 15,000 if all goes well with the background news both on the political and legal front.
The post-presidential unofficial election result rally and the buying euphoria associated with it on the perception of continuation of the existing economic and financial policies, could push the index to peak level and the market talk of 15,000 plus level may not be an expectation only, but is linked to apex court’s ruling on his eligibility as a presidential candidate, some leading brokers believe.
But some others said the entire affair appeared to be ‘inspired’ by some quarters who have a stake in it, but the ground realities are silent on the issue and the current market run-up.
“But when the money comes in tons, most of the basic fundamentals take a back seat ignoring the irritants and this is what is happening in the market”, said analyst Ahsan Mehanti.
After having hit an all-time high of 14,536.49, the KSE 100-share index at 14,463.78 and the market capital at Rs4.4 trillion indicates that a strong foundation has been laid for another boom, within the current year, floor brokers said.
Last week new records were set, both in terms of index level and the market capital, and analysts said both the records could be broken by year end if the current judicious blend of local and foreign buying is sustained in coming weeks. The share market welcomed the unofficial re-election result of President Musharraf for the second term, but analysts warned investors not to be carried away by current buying euphoria and await the final apex court ruling on his eligibility and official notification.
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Much of the rise in the index was contributed by half a dozen leading base shares, notably National Bank, Pakistan Petroleum, Bank Alfalah, Askari Bank, Bank of Punjab and OGDC. The KSE 30-share index rose by 386.91 points at 17,718.51 points.
The larger bench of the Supreme Court will resume hearing on the petitions seeking its ruling on the eligility of Musharraf as a presidential candidate in uniform after it allowed the election on Oct 6, but did not allow official notification of the results until final court ruling on the issues.
Analysts were divided on the final court ruling after Oct 17, hearing. Most optimistic among them say the court may go with the popular response.
‘‘The progressive rise in the single session volume to well over 300m shares, which is considered a barometer of investors’ confidence in the market, reflects the future viability of the share market,” they said.
But some others said the issue involves important constitutional issues, which will have far-reaching impact on the future political set ups and the apex court would like to decide them once for all, protecting the national unity.
“The apex court verdict could be either-way but will certainly be based within the constitutional framework”, said a leading analyst adding, ‘‘ it may not be a wise decision to jump to hasty conclusions at the early stage of the legal process”. He said the market’s chief worry is still there in the form of political uncertainty and that would perhaps end with the court ruling on the petitions.
The market has been in the tight grip of speculative traders for the last couple of weeks, of course, with snap interruptions but the post-election buying euphoria should be weighed in the backdrop of objective legal points and their strict adherence, some others said.
However, those investors who were not inclined to ride the bandwagon just in a hurry stayed away and decided to watch the course of apex court proceedings before joining the main stream, they said.
Top gainers were led by Pakistan Resource Co and Colgate Pakistan, followed by Arif Habib Securities, Arif Habib Ltd, JOVC, JS Global, Adamjee Insurance, EFU General, Mirpurkhas Sugar, Pakistan Refinery, PSO, Shell Pakistan, Pakistan Oilfiedls, Pakistan Petroleum, HinoPak, Indus Motors, Dawood Hercules, Clariant Pakistan, Grays of Cambridge, Cherat Papersack, Murree Brewery MCB and Shezan Interantional.
Lakson Tobacco, Nestle Pakistan, were among the leading losers, Sapphire Fibres, Al-Ghazi Tractors, Millat Tractors, Engro Chemical, Gillette Pakistan and Pakistan Services followed them.
FORWARD COUNTER: Barring late pruning in some of the leading shares, notably MCB, National Bank and OGDC, speculative issues on the forward counter maintained their upward thrust and finished with extended gains.
Lucky Cement, OGDC, D.G. Khan Cement, Bank of Punjab, Bank Alfalah, Engro Chemical, Pakistan Petroleum, and Fauji Fertiliser Bin Qasim on-balance finished on the higher side.
—Muhammad Aslam.
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