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THE KSE 100-share index, last week, recovered from its previous lows and signalled that it was again heading towards its coveted level of 12,000 points and beyond on the strength of a renewed buying euphoria aided by some positive developments on the funding front.
The market’s upward drive was also well-reflected in the KSE 100-share index which recovered 344 points and hit the week’s highest level above 11,700 by adding Rs91 billion to the market capital at Rs3.289 trillion.
Although, leading oil shares failed to maintain their initial run-up on late foreign selling, banks - notably the NBP and the MCB – cement, and auto shares gave the much-needed upward push to the broader market thus leading to a bull-run.
Opinions were, however, divided about its future outlook in the backdrop of heating up of the political scenario and the talk of a march on Islamabad. But in the market parlance a bull-run was expected to continue on positive news from the corporate and privatisation fronts.
Stocks, however, recouped a good part of their previous losses on active follow-up support triggered by the reports that a new product was being considered by the SECP and banks to replace the existing Continuous Funding System (CFS), probably by next month.
Some leading analysts feared the removal of investment caps could well prove a double-edged weapon as enormous funds at the disposal of individuals from the bank could eventually lead to speculative trading which is fraught with high risks.
The current buying euphoria associated with the new product could take the KSE 100-share index beyond its currently established all-time peak level of 12,336 points but how to sustain it could be a problem, some analysts feared.
Apart from the market’s attractively lower level reached by the previous week’s massive fall of 665 points or six per cent, the other stimulating factor was the flotation of another 100 million shares of the OGDC along with its Global Depository Receipts (GDR). This also boosted the market as all leading oil shares joined it in a sustained run-up. The NBP, the MCB and some leading cement shares also performed credibly well.
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There may be two opinions about the future direction of the market in the backdrop of developing situation on political front, the market fundamentals signal a fresh robust rally in coming sessions.
But it would be a no-win situation, both for bulls and bears as the market still was in an oversold position and the latter was eyeing some leading shares currently ruling well below their fair values.
The KSE 100-share index recouped most of the previous losses and was quoted higher at 11,686.44 points as compared to previous week’s 11,342.00, up 344.27 points aided by a sharp rise in share values of leading base shares, notably the OGDC, the PTCL, the Pakistan Petroleum, the Pakistan Oilfields and the National Bank.
The CFS funding in forward counter was capped at Rs25 billion in an apparent effort to check an abnormal speculation in any of the scrips. There were strong rumours that it will be either done away with or banks will be allowed to directly arrange finances for prospective investors at the market’s interest rates.
Operating under a capped investment regime do curb a speculative activity reminiscent of March 2005 market crash, but at the same time it also chained the genuine investor to go beyond the ceiling which sometimes worked against their financial interests, analysts said.
However, it was too early to say something about the new financial product. Initial market reaction shows it would be widely welcome in whatever form it was introduced, sans the CFS, they said.
It is too early to speculate whether the current run-up could be sustained in coming sessions as some negative political factors have crept into share business and only next couple of sessions will tell the future outlook, some brokers said.
Oil, bank and cement sectors, which had received massive battering during the last week again set the market trend followed by active short-covering at lower levels. Cement shares responded positively to reports that the India has banned cement export to Pakistan to keep their local prices lower.
The OGDC, the Pakistan Petroleum, the D.G. Khan Cement, the Lucky Cement, the National Bank, the MCB, the Bank of Punjab, and the PTCL were leading among the most active scrips which finished with sharp extended gains.
FORWARD COUNTER: Speculative issues on this counter came in for strong buying at lower levels and rose sharply higher under the lead of National Bank which surged to Rs282.50.up Rs24 on higher profits.
The OGDC, the MCB, the Bank of Punjab, the Pakistan Petroleum, the Pakistan Oilfields, Lucky and the D.G. Khan Cement followed them, although some of them finished reacted on late selling.—Mohammad Aslam
