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| March 31, 2008 | Monday | Rabi-ul-Awwal 22, 1429 |
Market welcomes new PM with extended gains
THE share market last week remained in an upbeat mood as investors continued to build up long positions on selected counters aided by positive developments on the political front leading to smooth transfer of power and formation of people’s government and ending the prolonged uncertainty.
The next week could be more productive as a section of foreign investors is expected to join the local bulls adding further strength to the underlying sentiments and broad-basing the portfolio buying. Barring a below market expectations final cash dividend of 15 per cent by Adamjee Insurance followed by a massive fall, other corporate news were on the higher side under the lead of Century Insurance, which announced bonus shares at the rate of 30 per cent and right shares of 50 per cent at a premium of Rs20 per share.
The market welcomed the new prime minister ending uncertainty about transfer of power and other irritants which worried investors who mostly played safe without taking financial risks even on the safe havens.
The KSE 100-share stood firm above the barrier of 15,000 points at 15,268.22, up 274.35 points with indications that its next target could be 16,000 points after the new government is fully operative.
“The deck is now clear and investors could ride the bandwagon without any reservations”, said a leading analyst Faisal A. Rajabali. “Those who are still in two minds about the future market outlook may miss the bandwagon and repent,” he added.
“Most of the market irritants are gone. Those who are taking fresh positions without awaiting the return of foreign investors may not be losers as handsome capital gains await them amid impending price flare-ups,” he added.
Apart from positive political developments, which continue to boost investors’ confidence, the waiver on cash margins under the MK-II trading rules to be effective from April 7 also supported the market sentiment.
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“That will mean too much a rupee will be chasing too few a stock”, an analyst commenting on the accepting of lifting of margins condition by the regulator said.
“By the end of this week, the new federal cabinet is expected to be in seat starting its normal functions to put the economy back on the rails and giving relief to the general consumers,” some others said.
The market’s buoyant mood was also reflected in the performance of the KSE 100-share index, which not only soared to its new high but also sustained it, signaling it would go higher.
Leading cement shares including of Lucky Cement and D. G. Khan Cement; bank shares under the lead of MCB; oil shares and blue chips notably, EFU General, EFU Life, Siemens Pakistan, Wyeth Pakistan, Fazal Textiles, AKD Capital, Tri-Pack Films, Attock Petroleum, and Arif Habib Securities were the market trend setters.
The market witnessed a flood of new buying orders from almost all quarters soon after it opened as no one wanted to miss the bandwagon amid analysts’ predictions of smooth sailing on the political front.
“The investors should go by the initial broader market reaction to the new prime minister who is a man of conviction and strong will”, said a leading analyst. “But the mess will take quite some time to be cleared and normalcy restored,” he said.
But some others said the future direction of the market would be guided by the policy initiatives of the new government on the economic and financial front and the steps it takes to correct the situation.
However, the low volume signaled that investors were closely following the changing developments on the political front and were inclined to play safe until a clear picture emerged, they said.
“Much of the initial robust rally will depend on how the foreign investors view it,” another leading analyst said. “If they are in, there may be a boom, and if they are reluctant there could be more than one problem,” he added.
Forward counter: Leading shares on the cleared list also followed the lead of their counterparts in the ready section and mostly ended higher amid active trading. Leading gainers among them were MCB, Pakistan Oilfield, Pakistan Petroleum, Bank Alfalah, JS Bank, Lucky and D. G. Khan Cement and some others.
—Muhammad Aslam
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