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Strong weekend rally boosted by higher interim dividend by some leading oil shares, notably the Pakistan Oilfields and the Attock Petroleum, pulled the market out from an initial sluggishness as investors continued to build up long positions despite fresh price flare-up.
An interim dividend of 75 per cent by the Pakistan Oilfields and 40 per cent by the Attock Petroleum and the market talk of a bit higher by some others did not allow bulls to sit on the sidelines and triggered a fresh flare-up on bank, cement and oil counters. An interim of 10 per cent by the Fauji cement gave a pleasant surprise to many.
There were indications that the dividend-related support may not allow the market to fall from the current levels despite some negative comments on the price flare-up as the bulls’ near-term target appeared to be the index level of 11,000 points.
After having broken previous barriers on fresh strong buying in leading base shares, the KSE 100-share index last week set new all-time high records from the early lows aided by most of the leading shares in bank, cement and oil.
At one stage it soared to a new peak level of 10,731.41 points but failed to sustain it, due to profit-selling at higher levels and because of the absence of leading financial institution. It finally finished higher by 279 points at 10,726.46, breaking three consecutive barriers amid market talk of higher dividend.
Speculative dividend-related support apart, the perception of higher interim corporate earnings did not allow investors to take even a technical breather in a highly overbought market.
The market talk of an increase in the Continuous Financing System (CFS), from the current Rs25 billion to around Rs40 billion, amicable settlement of the non-member chairman issue and few other positive developments boosted the early market sentiments, said a leading broker.
Although, a section of leading investors indulged in profit-selling after the mid-week but selling was too feeble to halt the market’s upward trend - thanks to the presence of strong support at the dips.
Although, the market was still in an overbought position but analysts ruled out the possibility of any major shakeout at this stage as higher interim announcements were due by the leading shares during the next couple of weeks.
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Trading resumed on a bullish note as investors continued to build up long positions on bank, cement and oil sectors. None among them was inclined to miss an attractive bait of capital gains and higher payouts.
The KSE 100-share index crossed the crucial barriers of 10,500 and 10,600 points despite being in a highly overbought position and needed correction before resuming the upward journey to its next chart point.
Apart from the speculative buying aided by reports of higher corporate payouts, the current price flare-up was also attributed to the reported settlement of the issue of non-member chairman of the Karachi Stock Exchange after a long tussle with the former Chief of the Security Exchange and Commission of Pakistan (SECP).
The credit for an amicable settlement goes to the new chairman of the SECP who was in the city last week and held long meeting with the KSE high-ups on the demutualization of the bourse and the non-member chief.
It was a good beginning with the chief of the regulatory commission during his maiden visit and reflected his strong convincing power to settle the issue, a leading analyst Hasnain Asghar Ali said adding, but it was none’s victory or defeat and was aimed at the cordial relations between the two.
It was more important that the market did not look away and maintained its sustained run-up despite the presence of some external depressants, including the train accident in Punjab and negative news from the Northern Areas, Faisal Abbas another stock analyst said.
None could deny the fact that the technical correction was overdue but as bulls were not inclined to leave the arena the bull-run was extended beyond its mandate, he added.
Bank shares, under the lead of National Bank, Bank of Punjab, and the MCB again led the market advance amid talks of higher dividend and bonus shares followed by the cement, oil and some leading shares on other counters, including the fertilizer giants.
The board meetings of some were already held during, while of few more were on the itinerary. Some leading shares had already announced higher interim cash dividend and bonus shares.
FORWARD COUNTER: Speculative issues on the forward counters rose further under the lead of the OGDC, the MCB, National Bank, followed by the Lucky Cement and the D.G. Khan Cement which showed fresh sharp gains on active support. The PTCL, Fauji Fertiliser, Telecard, Engro Chemical, Pakistan Oilfields, Pakistan Petroleum and some others followed them by finishing with good gains.—Muhammad Aslam
