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STOCKS maintained their upward drive for the sixth week in a row as investors continued to build up long positions on selected counters on the perception that existing financial and economic policies will continue after the presidential election.
The apex court’s ruling on the holding of presidential election on the scheduled date of Oct 6, with a condition to withholding official results until the final verdict on the petitions, though came late at the end of the last week, it will certainly boost the market when trading resumes next week.
The reported deal with Benazir Bhutto under national reconciliation official move is said to be another positive factor for the market as the deal is expected to end the prevailing political uncertainty, analysts said.
The KSE 100-share index again crossed the barrier of 14,000 points boosted by heavy buying in the oil, bank and some other blue chips, but analysts said its future forward drive is essentially linked to the presidential election and positive ruling by the apex court on the review petitions.
It closed at 14,099.30 points adding over 747 points and Rs218 billion to the market capital amid hopes that President Musharraf would get re-elected despite legal problems and resignations by opposition parliamentarians, market sources said.
If the larger bench of the Supreme Court, hearing a petition against President Musharraf’s eligibility to seek re-election, gives a positive ruling, there could be a renewed buying euphoria, which could take the index to new heights, analyst Ahsan Mehanti said.
It is for the second time during the current year that the index has broken through the psychological barrier of 14,000 points. The previous feat was achieved in March when it had hit the so far all-time peak level of 14,236 points.
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Stocks reacted bullishly as the way for Musharraf’s re-election as president for the second term is cleared after dismissals of petitions of the opposition by the apex court, but some analysts said the legal battle may not be over as yet.
The KSE 100-share index soared by 700 points or about six per cent at 14,099.3 adding about Rs218 billion to the market capital at Rs4.3 trillion or $72 billion in the post-apex court verdict, which is all-time high so far.
The free-float 30-share index showed its career-best single-session rise of 593.6 points or 3.67 per cent at 17,333.43 and credibly matched the recent all-time high gains netted by its counterpart, the Mumbai Stock Index, over the last week. The Mumbai Stock Index after an unprecedented price flare-up on massive foreign buying had closed well over at 17,331 points. The bulk of the buying interest remained confined to half a dozen leading base shares, mainly MCB, OGDC, National Bank, Pakistan Petroleum, Pakistan Oilfields, Engro Chemical and some others, which together hold a weightage of over 50 per cent in the index.
Literally investors were a bit shaky and did not go beyond the safe havens of oil, bank, and cement sectors as no one was willing to take even a calculated risk at this stage, floor brokers said.
“We don’t call the snap run-up a deceptive net”, they said “but the situation is certainly fraught with high risks as there could be some surprises too in the coming legal battle in the Supreme Court”.
The initial buying euphoria could receive a major setback amid conflicting reports including presidential candidates claim to seek review of the last Friday’s apex court’s larger bench ruling by the full court, analysts said.
The dismissal of petitions by the Supreme Court seeking verdict on his dual office on technical grounds and official seal on his eligibility to seek re-election by the election commission after accepting his nomination papers has cleared the way for him to contest presidential election on Oct 6, analyst Ashraf Zakaria said.
“The legal battle seems to have divided investors in two distinct groups”, he said “those who think the president could wade through the legal hitches led by the bulls”.
But those who think otherwise, mostly played safe awaiting fresh developments on the legal front, he added. “The talk of postponement of the presidential election for a specific period pending the apex court decision on the review petition could work against the market, terribly blunting the buying euphoria”.
But an objective view was that investors should not be carried away by the positive and negative political under-current, “the developing situation on the constitutional front could well prove a double-edged weapon”.
Plus signs were strewn all over under the lead of Nestle and Siemens Pakistan. Other prominent gainers were Javed Omer Vohra, MCB, National Bank, Adamjee Insurance, EFU General, IGI Insurance, Pakistan Resource Group, Shell Pakistan, Unilever Foods, Shezan International, Nantional Foods, Cherate Papersack and Packages.
Some of the MNCs attracted selling under the lead of Colgate Pakistan and Unilever Pakistan. Other losses were mostly fractional barring Kohinoor Mills, Crescent Textiles, Gatron Industries, Moonlite Pakistan and Al-Ghazi Tractors.
FORWARD COUNTER: Speculative issues on the forward counter also remained in strong demand and finished with smart gains under the lead of MCB, National Bank, PTCL, OGDC, Pakistan Petroleum, Pakistan Oilfields, Bank of Punjab, Bank Alfalah, Lucky Cement, Habib Bank, Engro Chemical and several others. As a matter of fact there were boom-like conditions on all counters including oil, cement, bank and insurance.— Muhammad Aslam
