KARACHI stocks last week passed through a buying euphoria reminiscent of boom conditions of the mid-90s powered by a judicious blend of both local and foreign speculative buying.

Predictions of an early sell-off of the PSO — an oil marketing giant and rumours of an interim dividend by the Hub-Power further intensified the bull-run owing to heavy speculative buying and added to them was a positive news about cement exports to Afghanistan.

Most of the time all roads led to the Karachi Stock Exchange as investors were out to ride the bandwagon powered by the strong presence of the Americans and the predictions of an advent of foreign-fund buying at attractively lower levels.

After breaching the 4th successive psychological barrier of 1,600 points, the 100-share index allayed all fears of its ability to sustain the speculative run-up but bears were conspicuous by their absence, while bulls intensified each session. It was last quoted at 1,671.00, signalling to cross the 1,700-point index level.

The rise over the week was another 145 odd points or 9 per cent, which pushed the market capital by a hefty figure of Rs31 billion around Rs378 billion. During the month of January it has risen by about 400 points or 25 per cent adding Rs65 billion to the market capitalization.

The perception of a robust economy, steady inflow of foreign aid and a major boost to export after some duty concessions on textiles and increase in quota items did not allow the bulls to lay their guards despite the fact that the market is now terribly overbought.

“The financial benefits, overdue as a US-led coalition partners against the terrorism, have begun to manifest themselves in hard cash and that is what the market was yearning for the last couple of years”, says a member of the KSE. “There is all good news no bearish ones”.

A major breakthrough on the export front by some leading cement producers under the lead of D.G. Khan Cement and Lucky Cement added new bullish chapter to the already charged atmosphere. Most of the undervalued cement shares virtually raced to their par values on strong support. Alone on Thursday 30 million shares changed hands including 18 million in the Lucky Cement.

Both, the Hubco on rumours of an interim dividend after its settlement of all the disputes with WAPDA, and the PTCL proved to be star performer taking the entire market along with them in each session.

“Only fools could miss the current buying euphoria”, stock analysts at the AHRL say,” adding technical corrections in an overbought market could further intensify the bull-run”.

News of the sell-off of the PSO appears to have added new element for speculative bargain-hunting and if the Privatization Commission strictly adheres to its schedule, it could give the needed push to the tired bulls, thinking of profit-taking, to make fresh commitments. An identical sell-off news about the KESC and the Sui Northern also aided the sentiment.

“It could well be a big sell-off in the trading history of the KSE”, stock analysts at the W.E.Financial claim. “Massively capitalized and holding the POL market share of 75 per cent including an annual sales of about $2 billion, the PSO is capable of taking the entire market to a new index level”.

In good old days, its 10-rupee share was quoted as higher as Rs400, with record dividend and bonus shares above 100 per cent each year. In the recent past it has fallen below Rs100 owing to a decline in selling prices of oil products.

“Reports that a groundwork to privatize oil marketing giant, the Pakistan State Oil (PSO) has been completed and it could go for sell-off shortly”, stock analysts at the Moosani Securities said, “no one is willing to miss it at the prevailing rate on the perception that its share value could rise to any highs as the date of sell-off draws near”.

For the last several sessions it has been under pressure both in the ready and forward sections and has dropped to as low as Rs93. But the late strong support pushed its share value above the Rs100 level at Rs110.

The PTCL also played a supporting role and maintained its upward drive as a section of investors purchased it after liquidating long positions in the Hub-Power.

Apart from the encouraging corporate news, reports from the foreign aid front were more stimulating as investors were not inclined to entertain bearish ideas at least for the near-term.

“The market has, at last, found a path which could lead investors to the targeted goal backed by the perceptions of a robust economy and boost in industrial production”, says a leading broker.

On the dividend front, a cash dividend of 35 per cent by the Aventis Pharma for the year ended Dec 31, 2001 seems to have fallen below the market expectations as was reflected by a sharp decline of Rs2.45 in its share value at Rs48.05. The International Industries, announced an interim of 15 per cent and the Fauji Fertiliser final at 10 per cent, which together with the interims of 75 per cent, makes the total to 85 per cent, the EPS being about Rs13.

Energy shares early led market under the lead of the PSO, Pakistan Oilfields and Shell Pakistan. Other good gainers were led by the BOC Pakistan, Dawood Hercules, Engro Chemical, Century Paper, Cherat Papers and Lever Brothers.

But the largest rise of Rs60 was noted in the Wyeth Pakistan, which maintained its upward drive for the fourth session and has risen by Rs45.

Traded volume soared to a record figure of 1.2 million shares, about 70 per cent of which was shared by the Hub-Power and the PTCL followed by the Lucky Cement, the D.G.Khan Cement, Sui Northern, the ICI Pakistan, the PSO, the KESC, Dewan Salman, the FFC-Jordan Fertiliser, Japan Power, Engro Chemical, the MCB, and several others in different sectors.—Muhammad Aslam