KARACHI, Jan 14: Stocks on Monday reacted bullishly to the president’s speech and made an extensive short-covering in the pivotals on the perception that the goal of peace now may not be that elusive.

The market’s bullish mood was more pronounced on the forward counter where leading among the blue chips finished with limit-gains above the ceiling rate of Rs1.50 for Engro Chemical, ICI Pakistan and PSO, the biggest rise of Rs4.50 equivalent to three emergency clearing was recorded in PSO.

A four-per cent or 53 point increase in the index has reinforced the investor confidence that his peace overtures after banning the extremist religious parties followed by a massive crackdown on their activists and positive hailers from the world leaders, including the US president, could allay the fears of an imminent war.

“The market’s reaction to the president’s speech though is spontaneous but is billed as psychological rather than real as 70 per cent of the support was confined to Hub-Power and PTCL, which together hold a weightage of 43 per cent in the index,” some leading brokers say, adding “much will depend on the fact whether or not it is sustained in the coming sessions”.

The market’s buoyant outlook was also evident from a steep rise of 53.02 point or about four cent in the KSE 100-share index, which not only breached through the barrier of 1,400 points but also sustained it firmly after finishing around the day’s best level of 1,427.96. Market capital rose by Rs10.516bn at Rs326.736bn.

Its performance matched that of the Mumbai stocks, which reacted the same way as it did anticipating progressive withdrawal of troops from the war-like positions.

“Without awaiting the official Indian response to the steps taken by the president to cross-border terrorism, investors’ initial reaction appears to be a ‘big yes’ for the farewell to arms,” says a leading floor broker.

The banning of major extremist religious parties and the president’s vow to curb terrorism, including the cross-border one, could go a long way as a confidence-building measure between the two close neighbours, most brokers believe.

“It was a judicious blend of both peace and war overtures,” a leading stock analysts commenting on the president’s speech says, adding “and if it is followed by the troop withdrawal, it will open the floodgate for foreign investment”.

“It was a big morale booster for a market weighed down by an imminent fear of war,” stock analysts at the W.E. Financials said, adding “there is no reason to believe that the bullish tempo may not be sustained in the sessions to come provided India reacts the same way”.

The same view is held by the stock analysts at the Moosani Securities as fading of war fears could attract foreign fund buying at the prevailing lower levels.

Although bulk of the support was confined to Hub-Power and PTCL that together accounted for 110m shares, out of the total volume of 156m shares, other blue chips also virtually raced toward their pre-reaction levels on active short-covering, the big gainers being PSO, Engro Chemical and many others.

Plus signs were strewn all over the list under the lead of Millat Tractors, IGI Insurance, PSO, Shell Pakistan, Adamjee Insurance and Rafhan Maize, which posted gains ranging from Rs2 to Rs10. Pak Reinsurance rose by Rs23.50 against its face value of Rs100.

ICI Pakistan, Engro Chemical, Fauji Fertilizer, Hub-Power, Javed Omer, Lever Brothers, CB and Pak-Suzuki Motors also rose sharply by one rupee to Rs1.65.

Losers were led by Nestle MilkPak, off Rs4.75 on selling for no apparent bearish reason, Fateh Industries, Dawood Hercules, Rupali Polyester and Gatron Industries, off one rupee to Rs4.

In an expanded traded volume, advancing shares held a strong lead over the losers at 136 to 33, with 29 shares holding on to previous levels in a broad-based rally.

Hub-Power topped the list of most actives, sharply higher by Rs1.50 at Rs19.80 on 70m shares, followed by PTCL, higher one rupee at Rs16.05 on 40m shares, Sui Northern, up also one rupee at Rs10.30 on 10 shares, PSO, higher by Rs4.65 at Rs103.90, and Engro Chemical, firm by Rs1.45 at Rs57.05 on 4m shares.

NATIONAL BANK: Heavy turnover of over 1m shares was recorded in its share at Rs12.65, up 30 paisa from the weekend close. It touched the highest and the lowest at Rs12.75 and Rs12.50.