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| April 07, 2008 | Monday | Rabi-ul-Awwal 29, 1429 |
Market rises to record high at 15,472 points
THE Karachi Stock Exchange100-share index last week firmly maintained its rally and analysts said it was steadily moving to its next target of 16,000 levels, which did not appear to be an elusive goal.
Strong presence of leading foreign funds on oil, bank, insurance, cement and fertiliser sectors continue to inspire the local general and institutional buying, pushing the index steadily higher amid higher volumes, they said.
What seemed to have inspired strong foreign buying were reports that the index had the potential to rise by about 20 to 25 per cent more during the current year aided by end of political uncertainty, stable coalition government and higher corporate earnings, they added.
Already, the market had touched the record mark of 15,518 in intra-day trading on Friday and finally closed the week at 15,472.45, up by 204.23 points.
All indicators point towards a robust rally in coming weeks after the end of political uncertainty and resumption of work by the government at the centre to give new direction to the country’s economy.
However, the market has its own mechanism and inbuilt strength to behave, though political stability provides it the needed push upward. The sharp increase in volume well over 300m shares reflects that investors are back in the market with a resolve to stay under the lead of financial institutions.
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All may not be well with the economy, particularly the high rate of inflation, trade deficit and growth rate, but it appears that the new leadership is capable of giving positive direction to the economy in the coming months. Stocks, however, resumed trading on a subdued note followed by active selling amid talk of an official probe into the two major market crashes during former prime minister Shaukat Aziz’s regime which wiped out billions of dollars from the market capital.
Some analysts, however, said it was a technical selling in the backdrop of last week’s sustained run-up rather than any other negative development on the political front after swearing in of the federal cabinet.
The stock market had witnessed major crashes in March 2005 and June 2006 on ‘speculative manipulation by some big players’, which had wiped out about $15 billion and $13 billion savings of small investors. Subsequent probes, including by foreign experts, had failed to pinpoint the players behind the crashes in the absence of evidence, which, the foreign expert claimed, were wiped out from computer data.
“The news about the probe came at a time when the market was bracing to explore higher levels on perception of smooth running on political front with a two thirds majority”, a leading analyst said.
But its impact remained confined to the opening session as investors had some rationale thinking on the issue. They resumed their normal trading activity by the next session.
Another analyst Hasnain Asghar Ali said the state of the economy being handed over to the new regime should worry them and the market and its putting back on the sound footing would need a lot of local and foreign efforts.
“The market is playing on a sound footing with an index level of well over 15,000 points and it should not be weighed down by negative feelers,” analyst Ashraf Zakaria said.
Bulk of the support remained confined to cement shares on reports of higher exports and earnings; banks, oil and leading shares, on other counters, mainly Engro Chemical, Dawood Hercules, Adamjee Insurance, EFU Life and General Insurance, Siemens Pakistan, AKD Capital, and many others.
Forward counter: Leading shares on the cleared list also followed the lead of their counterparts in the ready section and generally rose under the lead of Engro Chemical, OGDC, Pakistan Petroleum, PSO, Bank of Punjab, MCB, National Bank and Bank Alfalah. Lucky Cement and some others failed to sustain the early gains and ended lower. —Muhammad Aslam
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