Stocks, during the last week established new peak levels amid highly erratic price movements. Final closing remained on higher side as the bulls were not inclined to give a breathing space to the bears.

Both, the total market capitalization and the KSE 100-share index ended at their new carrier-best levels at Rs756 billion and 3,400 points. Analysts predict there could be more pleasant surprises in store for prospective investors during the coming week.

“The market’s best performance is yet to come as bulls are eyeing the index level of 3,500 points for short-term and may look forward to 4,000 points if the prevailing political standoff eases and the LFO issue resolved”, says a leading broker.

Profit-selling in cement and auto shares at the fag-end of the week signals the beginning of overdue correction in a highly overbought market, he adds.

But the buying euphoria associated with the president’s US visit followed by an aid package of $3 billion is progressively fading out as fears related to higher carryover charges in a highly overbought market have begun to take their toll in the form of massive liquidation in pivotals.

However, on-balance finish was on the higher side amid highly erratic price movements, thanks to massive buying in the Hub-Power and the PTCL at the weekend session. The KSE 100-share index ended higher by 94 points at 3,400.08 and the market capitalization at Rs756 billion, up Rs20 billion over the week.

Situation at the Lahore Stock Exchange was more critical where the carryover charges (badla rate) have peaked to an all-time high of 30 per cent and how many casualties it leaves in its wake will be known by next week.

The KSE also faces an identical dilemma as badla rate has risen to 17 per cent in a heavy volume of about Rs14 billion. Thursday’s sell-off on the KSE was the fall-out of a distress signals from Lahore, some brokers said.

Investors are now caught between two equally risky options and could not precisely decide how to react to the developing situation in the backdrop of political tension, they said.

The market’s advance was again led by the cement sector on fresh heavy buying followed by the reports of second increase in production quota to 79 per cent from the previous 72 per cent and lower levels, which still ensures a lot of capital appreciation. Insurance, auto, energy, fertiliser and leading textile shares followed them amid active trading.

The satisfying feature is that both the KSE 100-share index and the market capitalization had touched their career-best levels at 3,423 points, and Rs756 billion and what is next, is dependent on the settlement of carryover business, inflated rates and their impact on future trading.

But the leading analysts were not optimistic about any positive impact of the five-year US aid package as they have already read through the technicalities involved in the entire episode.

Together with the renewed virtual craze for cement and auto shares, an ambitious disinvestment plan, starting from July 1, also aided the underlying sentiment.

The KSE 100-share index surged by 40.96 points at 3,386.48, only 16 points below its next target of 3,400 and beyond, signalling that the widely speculated level of 3,500 points is now well within the reach.

The minister of privatization and investment during his Tuesday’s meeting with the members of the KSE outlined the salient features of an ambitious disinvestment programme during next three months.

According to him five per cent shares of the National Bank, the Sui Southern Gas, the PIAC and the Oil and Gas Development Corporation of Pakistan will be disinvested through the stock exchanges before Sept 30, 2003. Others including the KESC and the PSO will follow after the announcement of the final bidding date for latter within next two weeks.

However, his statement failed to stimulate new buying as much details of the next quarter plan were already known to members.

Analysts said, although opinions are divided over the size of the US aid package, its immediate impact on stock trading was positive but the absence of bargain-hunters and leading speculators tells a different story.

“The $3bn aid is a peanut for a frontline country against the US war on terrorism, notably in the backdrop of financial costs involved in Afghan war”, some said adding”, “the market may not be in position to sustain the run-up in long run”.

Some others, however, claim it was not the size of amount, which matters, it is the US pat on the president’s back for his cooperation against the war on terrorism, which will finally count leading to close relations between the two countries.

According to details half of the package will be used to retire the US debt of $1.8bn, and the other half for defence and social sector projects.

Bulk of support originated from the financial institutions, while other leading bulls were in two minds about the impact of aid package on the market during next couple of weeks.

Plus signs dominated the list under the lead of Gatron Industries, Javed Omer, the EFU Life Insurance, Dewan Khalid Textiles, Mari Gas — after the announcement of second interim at the rate of 10 per cent — Crescent Steel, Atlas Battery, Atlas Honda, HinoPak Motors, Tri-Pack Films and the Packages which posted gains ranging from Rs4 to 5.70. The largest rise of Rs14 was noted in Fateh Textiles for the want of floating stocks. There were many other good gainers also.

Losers were led by some of the leading textile shares, notably Quetta Textiles, Gul Ahmed Textiles, Mehmood Textiles, Sapphire Fibre, Noon Sugar, Treet Corporation and Colgate Pakistan. The bigger loser being Wyeth Pakistan, off Rs50.

Trading volume was maintained well over the 2bn share mark, thanks to active bouts of buying and selling in a dozen volume leaders. The bulk of business remained confined to the Hub-Power, the PTCL, the D.G.Khan Cement, the Lucky Cement, the Maple Leaf Cement, the KESC, the Bosicor Pakistan, the PSO, the Engro Chemicals, the FFC-Jordan Fertiliser and several others.

FORWARD COUNTER: Speculative issues on the forward counter also followed the lead of their counterpart in ready section. The notable features were the matured June settlements rung off the board, and the July contracts assuming the role of ruling deliveries.—Muhammad Aslam