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THE KSE 100-share index, in the preceding week, surpassed all previous records and remained only 64 points below the widely-speculated target of 12,000 points. Bulls dominated the trading after a relative lull in the week ahead of the last.
The index level of 12,000 points may now be not an elusive goal but the question being debated is what next? Some predicted beyond while others foresaw a technical correction, not the crash, as market fundamentals emerged bullish on the strength of higher corporate earnings.
The notable feature was that it breached through three consecutive psychological barriers and finished at an all-time-high level so far of well over 11,900 points. The share index was signalling its onward thrust beyond the target of 12,000, while the week ahead could be crucial for future direction.
The relative strength of leading base shares in oil sector, including the OGDC would perhaps allow it to stay above the level of 11,900 points followed by active speculative buying.
After moving either-way throughout the week, the KSE 100-share index finally finished around 11,936.59 points as compared to 11,485.90 points in the week earlier to the previous one. It was up by 450 points adding Rs129 billion to market capital.
There appeared to be straight fight between bulls and bears over the next index level. The former said that it was better to seek before the interim corporate were announced by most leading sectors including, oil and insurance. The latter claimed that the time was not yet ripe to play beyond the index level of 11,700 points. That was perhaps why each rise followed a reaction.
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The dividend announcement coming in from the insurance, auto and other sectors were more than encouraging and were keeping investors in a positive mood. But inconsistency in foreign fund buying was considered a negative factor.
The notable feature of the week was a major shift in the portfolio buying from overvalued shares to low-priced, including the Pak PTA, the Pakistan Cement and the Fauji Cement. However, bank shares maintained the upward drive under the lead of the BoP, the MCB, the UBL, and some others.
Although, rollover positions amounting to Rs9.6 billion were still outstanding which were expected to be settled by Wednesday while bulls were not inclined to take an extended breather and made extensive buying in most of the current favourites, putting the market back on rails.
Among bank shares, the National Bank, the MCB and the Union Bank remained in strong demand on reports of higher interim earnings, while the Pakistan Oilfields and the Pakistan Petroleum led a rebound in their respective counter.
The fact that the index managed to penetrate the widely speculated level beyond 11,700 points after several abortive attempts had raised many questions among general investors, analysts said adding all major base shares including the Pakistan Oilfields, the Pakistan Petroleum, the National Bank, and the PTCL were ruling on the higher side and should have tested the target of 12,000 points long ago.
But it appeared to be a distinct weakness of the OGDC, one of the major weightage holders after a steep rise, which could have been the chief inhibiting factor.
The sell-off of 75 per cent shares to a consortium of investors at Rs16.85 per share or Rs22 billion did not have any impact on the market as it was not listed but it did raise the hopes that some other leading state-owned units, notably the PSO, the NIT and others may follow soon adding to the depth of the market and to the privatization process.
The National Bank may not have touched its saturation point as news that the share value of Bank Al-Jazira was rebounded from the recent lows as it rose further from the previous level. It has about six per cent stake in the Saudi-based Bank Al-Jazira holding 0.875 million shares. The perception that it may sell the stake to qualify for opening a branch in the kingdom could boost its price further up in coming sessions, some analysts predicted.
The latest reports on new oil and gas finds in the NWFP were more than encouraging adding significantly to the existing production and in turn can boost some leading shares, predicted a leading analyst. He added that the fresh buying spree in the trio, the OGDC, Pakistan Oilfields and Pakistan Petroleum alone were capable of pushing the index towards the target.
News from Balochistan and tribal areas were disturbing but the market seemed to go along with positive corporate fundamentals rather than with the developing situation on the political front, he added.
After recent management change, the Wyeth Pakistan maintained its upward drive and rose by another Rs31 followed by the Arif Habib Securities, while losers were led by the Siemens Pakistan and the Wyeth Pakistan.
FORWARD COUNTER: Speculative issues on forward counter also followed the lead of their counterparts in the ready section and mostly rose amid active trading. The National Bank, the MCB, the Pakistan Oilfields, the Pakistan Petroleum, the OGDC, the Lucky Cement and the D.G. Khan Cement were leading gainers among them.—Mohammad Aslam
