Both, the 100-share index and the market capitalization hit their carrier-best level during last week as investors were not inclined to even take a technical breather in a highly overbought market.

Risk of a massive shakeout persists, if the record badla business was not settled in normal business norms and the jobbers and short-term dealers followed the lead of their big partners.

The euphoria was strong and all roads again led to the KSE as none was in a mood to miss the rising market, despite higher badla business and rates.

Speculative issues on the forward counters remained in strong demand where the MCB, the ICI Pakistan, the Fauji Fertiliser, Dewan Salman and the PSO, attained new career-best level on strong demand. Both, the PTCL and the Hub-Power remained market leaders in terms of daily volumes.

The KSE 100-share index broke the barrier of 2,800 points following the early abortive bids. It finally ended at 2,869.24 points after briefly touching its career-best level of 2,895, the net rise of over 124.42 points or about five per cent.

The market capitalization also soared to a record level of Rs628.140 billion from the previous all-time high figure of Rs610 billion hit a decade ago, ensuring massive capital gains for those who remained active participants.

“The breach of successive barriers is now no news for investors”, says an analyst, “what now enthuse them is an attractive bait of capital gains, which in some cases are above 100 per cent”.

Good news are following in quick succession never allowing investors to take an overview of the developing situation. The perception that the mid-week cut in profit rates of 6-month Treasury bills to 3.946 per cent may well prove a prelude to further reduction in the discount rates by the central bank.

“The tie is now between the share market and the banking system as a cut in discount rate has put banks at a disadvantage” one broker said, “too many a rupee now are after too many a stocks but even then the price flare-up is sustained”.

The total market capitalization soared to about Rs623 billion surpassing its previous all-time peak level of Rs610 billion established during the mid-90s boom conditions owing to massive buying in heavily capitalized shares, notably the PSO, the PTCL and the Hub-Power and steep rise in their share values.

“The sustained run-up without an overdue technical interruption in a highly overbought market has raised many questions but there are no precise answers from any quarter”, analysts said hoping “the end may not leave behind a long list of causalities”.

Heavy buying in the PSO featured trading as investors continued to build-up long positions for the second day in a row followed by the reports of second pre-bid meeting, leading to its sell-off to one of the short-listed strategic buyers. Hubco also faced the avalanche of buying offers and so did the Shell Pakistan.

“The successive breach of both records, the index and the market capitalization reflects the mood of investors led by financial institutions and the future outlook of the share business”, analysts said, “the sky may not be the limit, it is pretty difficult to pass on the judgment on the meteoric rise and their next chart levels”. The KSE 100-share index last week breached through its previous record of 2,662 points of mid-90s.

All roads may not be leading to the PSO, sharp price flare-up indicates that it is heading to establish new peak level for the new year before the sell-off deadline.

“Its share value in the sessions preceding the sale of its 51 per cent controlling shares may not touch its all-time peak level of Rs450 hit during the previous boom conditions over a decade back, could ensure a fair return to new investors”, one analyst predict, “the chart point of Rs300 for a 10-rupee share now does not appear that ambitious”. The Shell Pakistan also rose by Rs100 during the week in sympathy.

“I don’t think the overdue technical correction could make deeper inroads in the protected territory of bulls, at least for the near-term”, most analysts believe”. It now appears certain that 2,800-point level could be the benchmark”. There were quick moves to sell 51 per cent controlling shares of the PSO possibly before March 31.

“Much seems to have changed on the corporate front after the discount rate cut by the central bank, with massive excess liquidity to invest it in any gainful mode of investment”, brokers said, “at the moment there is none except the share business”.

Although, it is pretty difficult to find evidence of foreign buying but there is a talk of its presence on selected counters, notably the Hub-Power and some others.

“As the date of disinvestment of the PSO shares is drawing near, foreign investors, notably the bidders would like to reinforce their shareholding after cornering the floating stock”,says a leading broker. “The current surge in its share, notably on the forward counter is reflective of this phenomenon”. Plus signs again dominated the list under the lead of the PSO, the Pakistan Refinery, the Attock Refinery, the Pak Reinsurance Co and the Wyeth Pakistan. The highest rise of about Rs100 being in the Shell Pakistan, followed by reports of massive inventory gains after the recent increase in the POL prices, and rumours of handsome dividend and shortage of floating stock.

Other prominent gainers included the Sana Industries, the Pakistan Oilfields, the Pakistan Refinery, the Shell Gas, the Millat Tractors, the Siemens Pakistan, the Dawood Cotton, the 4th ICP, the Engro Chemical, the Fauji Fertiliser, the Sui Northern, the Central Insurance, the Colgate Pakistan, Al-Ghazi Tractors, the National Refinery and several others.

The Sarhad Cigarettes, the Gillette Pakistan, Fazal Textiles, the Clover Foods, the National Foods, the Mitchell’s Fruits and the Bhanero Textiles and some others were leading among the losers.

Trading volume was again maintained well over the 2 billion share-mark, about 50 per cent of which was shared by the Hub-Power and the PTCL, followed by the PSO, the Sui Northern Gas, the Engro Chemical and the Fauji Fertiliser.

Other actives were led by the ICI Pakistan, the FFC-Jordan Fertiliser, the National Bank, Dewan Salman, the MCB, the KESC and several others.—Muhammad Aslam