Stocks remained in an upbeat mood during the last week as bulls, led by leading financial institutions, continued to build-up long positions on selected counters aided by some positive local fundamentals, but an attractive bait of quick capital gains appears to be the chief inspiring force behind the run-up.

The money will go where it is safe and could appreciate, says an analyst, adding at the moment all roads lead to the stock market as it is the best bet based on optimism of the US victory in Iraq war and its bullish impact on the world bourses and in turn on the local ones.

The market’s buoyant mood was also well-reflected in five per cent or 92.47 points increase in the KSE 100-share index, which added another Rs19 billion to the market capitalization.

The market’s credible performance for the second week in a row is also guided by the positive corporate news and the perception of no immediate negative fall-out of the Iraq war on the economy but retailers were not inclined to ride the bandwagon for obvious reasons.

Investors seem to have decided to rely on local positive fundamentals rather than conflicting reports from the Iraq war front. Moreover, the falling interest rates has made share business more attractive and only fools could afford to miss an attractive bait of quick capital gains, analysts says.

“Unpredictables are the ways of the market to react to the ground realities,” one broker commenting on its meteoric rise said, adding “investors did buy on rumours but did not sell on news.” Further cut in interest rates and ban on unlimited buying of the investment bonds by the financial institutions are cited the chief reason behind the flooding of the share market by the surplus liquidity. But is it not risky to put all the eggs in a basket in war-like situation, they ask.

The KSE 100-share index confidentially breached through the psychological barrier of 2,700 points and ended well above it adding Rs19 billion to the market capitalization at Rs598 billion. It finally finished the week at 2,744.18 as compared to previous 2,651.71, up 92.47 points or about five per cent.

Bulk of the support originated from the financial institutions, which in the absence of the an adequate credit demand from the corporate sector for fixed investment, chose to plough surplus liquidity in the share business for quick gains. Higher dividend, notably from the insurance sector and leading shares in some other sections, including textile remained in strong demand throughout the week.

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 during the next week 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 reports of “allied victories” in Iraq continued to pour in.

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

“Push prices of leading base shares, notably the PTCL, the Hub-Power and the 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 the 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 follow deceptive tactic of the bargain-hunters or the speculative traders.

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

But some others said high-yielding stocks and those companies, which were due to announce their annual results were in the limelight amid hopes of higher dividends. Above market cash dividend and bonus shares by most of the leading insurance companies as well as from some others, including the Highnoon Lab did aid the rising market.

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 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 one, 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 the Dawood Hercules, the Treet Corporation, the Unilever Pakistan, the Wyeth Pakistan and the Parke-Davis, followed by the Bhanero Textiles, the Habib Insurance, the Dawood Cotton, the IGI, the Al-Ghazi Tractors, the HinoPak Motors, the Shezan, the Ferozsons Lab, the BOC Pakistan and the Unilever Pakistan, and many others.

Losers were led by the Lawrencepur Woollen, the Abbott Lab, the Nestle MilkPak, the Aventis Pharma, and the Siemens Pakistan, while others fell fractionally.

FORWARD COUNTER: After early weakness, speculative issues on the forward counter also followed the lead of their counterparts in the ready section and finished recovered under the lead of the PSO, the PTCL, the Sui Northern and some others. The notable feature was that the matured March settlements were rung off the board and April contracts assumed the role of ruling deliveries.