KARACHI, March 26: Stocks on Wednesday staged a smart rally as institutional support figured prominently on the selected counters aided partly by reports of higher corporate earnings and an uprising against president Saddam Hussein in Basra, which the Iraqi government denied.

The KSE 100-share index gained 61.69 points or 2.34 per cent at 2,695.13, adding Rs12.817bn to the market capitalization at Rs587.366bn.

There may be many other reasons behind the rebound, investors welcomed a virtual waiver against the prevailing standoff, although many were unsure whether or not the rally could be sustained in the next session in the backdrop of changing news from the Iraq war front.

But some others say the run-up is broad-based and could be sustained in line with the foreign markets if the “allied victories” in Iraq continued to pour in. “If there are no stimulating news, they are coined ones to fuel the rallies,” brokers said, adding the “revolt against Saddam may be one of them.”

The snap rallies in the index have mostly been deceptive as they seldom reflect the general health of the broader market and could only be an attractive bait which don’t know the inherent mechanism in them.

“Push prices of leading base shares, notably PTCL, Hub-Power and PSO, which together hold a weightage of 50 per cent in the index, and watch the meteoric rise in it,” says an analyst, adding “one rupee rise in the share value of PTCL adds 16 points in the value of the index.”

Analysts are divided over the market’s future direction as the war in Iraq could take any turn any day and are signalling to their clients not to follow deceptive tactic of the bargain-hunters or the speculative traders. “Give me one solid positive reason, which warrants the market’s credible performance,” a leading analyst asks. “Have cash heavy financial traders not other avenues to play with than the share business?”.

“I fail to share the prevailing optimism among the bulls,” says another, adding “but it is the part of the share business.”

But some others said high-yielding stocks and those companies, which are due to announce their annual results, are in the limelight amid hopes of higher dividends.

There is a near-standoff on the export, industrial production is falling, war risk surcharge has been imposed on the export and there is a terrible quietness on the commodity markets — why the stocks are rising, this is a question being debated even in the KSE corridors, brokers said.

Even news from the Iraq war front are not that encouraging as far as the US coalition perceptions are concerned as the “quick end seems to be not that near,” they said.

However, the falling volumes reflect that the retailers are not inclined to ride bandwagon as they have always been at the receiving end after the big ones decide to quit.

Both the leading institutional traders and the punters are playing in a dozen blue chips, which are fundamentally strong and are mostly not prone to negative external developments.

“In war-like positions as the prevailing ones investors, notably retailers follow the course of war rather than indulging in speculative trading, but those who could afford are in the arena,” analysts said.

Leading gainers were led by Dawood Hercules, Treet Corporation, Unilever Pakistan, Wyeth Pakistan and Parke-Davis, up Rs12.05 to Rs35. They were followed by Bhanero Textiles, IGI, Al-Ghazi Tractors, HinoPak Motors, Shezan, Ferozsons Lab, BOC Pakistan and Unilever Pakistan, up Rs3 to Rs7.50.

Losers were led by Lawrencepur Woollen, Abbott Lab, Pakistan Refinery, Aventis Pharma, and Siemens Pakistan, off Rs1.90 to Rs15.25.

Turnover rose to 161m shares from the previous 126m, as gainers held a strong a lead over the losers at 212 to 58, with 43 shares holding on to the last levels.

PTCL topped the list of actives, up 75 paisa at Rs24.35 on 47m shares, Sui Northern Gas, higher also by the same amount at Rs24.70 on 24m shares, PSO, higher by Rs4 at Rs205.80 on 17m shares, FFC-Jordan Fertiliser, firm 40 paisa at Rs11.40 on 13m shares and Pak PTA, up 35 paisa at Rs7.70 on 10m shares.

Other actives were led by Hub-Power, higher by Rs1.15 8m shares, ICI Pakistan, up Rs1.40 on 7m shares, Fauji Fertiliser, higher Rs2.5 on 4m shares, Dewan Salman, firm by 30 paisa also on 4m shares and Adadmjee Insurance, higher Rs1.55 on 3m shares.

FORWARD COUNTER: Speculative issues on the forward counter also followed the lead of their counterpart in the ready section and rose sharply under the lead of PSO, up Rs3.85 and Rs3.95 for both the settlements at Rs206 on 5m shares followed by PTCL, higher 75 paisa at Rs24.25 on 3m shares and Engro Chemical, up Rs1.65 at Rs 83.75 on a million shares.