KARACHI, Jan 7: Stocks on Monday reacted bullishly to positive developments at the Saarc summit, including peace initiatives and made active buying at the still attractively lower levels on the perception that war with India may have been averted. The KSE index recovered another 2.61 per cent or 35.53 points at 1,398.27.

The market advance was led by strong institutional buying aided by reports of ending tension on the borders after gradual deescalation amid reports of an “informal accord” between the high-ups of Pakistan and India at the Kathmandu summit.

All the leading blue chips virtually raced toward their pre-reaction levels, big gainers among them being National Refinery, Millat Tractors, Shell Pakistan, Siemens, PSO and BOC Pakistan, which rose by Rs2.50 to Rs10.

After briefly touching the barrier of 1,400 points, the KSE 100-share index finally finished close to the day’s best bid at 1,398.27 as compared to 1,362.74 at the last weekend, up 35.53 points or 2.35 per cent.

The visit of the British prime minister Tony Blair after having meeting with his Indian counterpart and offer of friendship by President Musharraf to Vajpayee are considered positive developments by the analysts leading to peace in the subcontinent.

“It may take quite sometime to defuse the tension on the borders after a massive troop build-up on both sides of the fence but foreign peace initiatives seems to have melted the ice,” stock analysts at the W.E. Financial Services believe.

“But the market literally enjoyed the great diplomatic offensive by the president at the summit,” they said, referring to president’s handshake with a nervous Indian prime minister, which apparently led to subsequent informal talks between the two sides.

Any positive development on the political front to normalize relations with India could add as many points to the KSE index until the thaw is broken, they add.

Stock analysts at the AHRL also held the same view claiming that the “market is literally dancing to the tune of political events and there are reasons to believe that the worst may be over”.

Most of the economic fundamentals are bullish and together with the prevailing lower levels, the market is poised to hit new highs in the coming sessions, they added. But it certainly needs peace at the borders to allow the consolidation forces to play their due role in similar conditions.

“It is terribly selective, but evidence of foreign buying is not hard to find,” says a leading stock broker, adding “a good number of investors are awaiting the advent of its intensified role”.

Plus signs dominated the list as activity spread to more inactive shares leading gainers among them being ICI Pakistan, Dynea Pakistan, Clariant Pakistan, Dawood Hercules, Security Papers and Fauji Fertilizer, which posted gains ranging from Rs1.25 to Rs2.15.

Wyeth Pakistan again led the losers, off Rs7.50 followed by Orix Leasing, New Jubilee Insurance, Habib Insurance, International Industries, Bata Pakistan, Murree Brewery and Al-Ghazi Tractors, off Rs1.35 to Rs2.

Trading volume rose to 156 million shares from the previous 108 million shares as gainers held a strong lead over the losers at 121 to 42, out of 215 actives.

Hubco again stole the day’s limelight owing to a judicious blend of both the local and the foreign short-covering, up 75 paisa at Rs19.10 on 64m shares followed by PTCL, higher 45 paisa at Rs15.60 on 45m shares, PSO, sharply higher by Rs4.65 at R101.40 on 10m shares, Fauji Fertilizer, up Rs2.15 at Rs46.15 on 6m shares and Sui Northern, firm by 35 paisa at Rs9.75 also on 6m shares.

Other actives were led by FFC-Jordan Fertilizer, firm by 20 paisa on 3.592m shares, Nishat Mills, up 65 paisa on 3.485m, ICI Pakistan, higher Rs1.30 on 3.416m shares, Engro Chemical, steady by 95 paisa on 2.358m shares and MCB, up one rupee on 2.068m shares.

FUTURE CONTRACTS: Speculative shares also showed firm trend, leading gainers among them being Fauji Fertilizer and PSO, which rose by Rs1.72 to Rs4.24 on active support at Rs46.00 and Rs101.25, respectively.