The KSE 100-share index and the market capitalization both finished at their all-time-career-best level last week, but analysts predict the best is yet to come as bulls are not inclined to take even a technical breather in a highly overbought market.
The KSE 100-share index netted a fresh rise of 42.46 points at 3,307.09, while the market capitalization soared by Rs12.587 billion to Rs735.488 billion, reflecting the strength of broader and a heavily-capitalized shares such as the PTCL, the PSO and the Hub-Power.
Stocks, therefore, remained in an upbeat mood during last week as optimism created by the President’s US visit, followed by the rumours of a fresh aid package and a debt waiver generated a lot of speculative buying both from local and foreign investors, notably in the Hub-Power and some other pivotals including the PTCL.
However, it appears pretty difficult to judge whether or not it was the strength of the speculative issues — notably the PSO — which kept the ready board in a bullish mood.
But leading analysts warn investors to be a bit cautious before riding the bandwagon as higher carryover rates’ unprecedented rise in most of the second-liners could attract panic-selling any time at the culmination of the President’s US visit and its outcome.
Badla rates in most of the pivotals have risen to 13.5 per cent and of the cement sector to 17.50 to 18.50 per cent, well meaning that those having a stake are sitting on the valcano, they fear.
The KSE 100-share index maintained its upward drive on the strength of leading base shares and finally crossed the Rubicon, as widely predicted but beyond that opinions are divided. Much will depend on the outcome of the President’s US visit and easing of local political standoff on the LFO issue.
The KSE 100-share index on Wednesday broke the barrier of 3,300 points and touched the highest at 3,322 followed by strong speculative buying in base shares aided by the optimism that a massive US aid package is awaiting President Musharraf after he meets Bush next week.
The net rise over the week at one stage was 42.46 points or 2.5 per cent at 3,307.09 but selling at the fag-end of the week pushed it below the recently attained peak level of well above 3,300 points.
The total market capitalization after setting a new all-time peak level at Rs735.480 billion sustained to close at its career-best level.
“The index could shed about 400 to 500 points after hitting its next target of 3,500”, analysts predict basing their assessment on renewed speculative-buying during the President’s visit to the US”. Rumours of the US financial aid will not allow investors to sit on sidelines as market is now in the tight grip of speculative forces”.
Those who managed to play the President’s US visit card judiciously could be ultimate gainers, although the situation is fraught with high risks for small savers and genuine investors.
Index finally finished at the day’s peak of 3,306.53, up 34.75 points over the previous close indicating that its career-best level is yet to come. Volume soared to 506 million shares including 147 million in the Hub-Power alone.
Both, the PTCL and the Hub-Power holds about 44 per cent weightage in index and if a set of operators decide to push the index to their pre-determined level, they make massive buying in both and the end-result is always positive.
The Hub-Power which has been dormant for the last couple of weeks seems to have made the vehicle to push the index above barrier and that was much easier than many may have thought. A massive activity of 147 million shares in it reflects that speculation about the positive outcome of the President’s US visit is now a foregone conclusion.
“It is now a couple of days away when Musharraf would meet Bush in Camp David but the speculative forces have initiated a virtual run on some of the pivotals to grab their floating stocks”, analysts said. “Bulls coin some positive factors to reinforce their idea behind the run-up if there is none”, one broker said adding “this appears to be the case with the current speculative run-up”.
No one could deny the fact that the index was destined to rise above the 3,300 level but timing appears to be incorrect, he said. “It would be better if the President is allowed to reach the American soil”.
Apart from pivotals, notably the PSO, the PTCL, the Hub-Power, the Pakistan Oilfields, auto and most second-liners on other counters also attracted active speculative support and ended with good gains.
Leading gainers were led by the EFU Life Insurance, the Crescent Steel, the Atlas Honda, the Ferozons Lab, the Pak-Suzuki Motors and the BOC Pakistan, which posted sharp gains but the largest rise was recorded on those counters whose floating stock were not easily available. Prominent losers included Jahangir Siddiqui & Co, Shahtaj Sugar, Dadex Eternit, National Refinery, Packages, Al-Ghazi Tractors, Bhanero Textiles and Pakistan Services, which ended with clipped gains.
Trading volume was on the higher, totalling about two billion shares bulk of which went to the credit of the Hub-Power, the PTCL, the D.G.Khan Cement, the Sui Northern Gas, the Pakistan Oilfields, the FFC-Jordan Fertiliser, the WorldCall, the Engro Chemical, Dewan Motors and several others.
FORWARD COUNTER: Speculative issues on the forward counter also performed well despite mid-week slashing, and on-balance finished higher under the lead of the PSO, the Hub-Power and the PTCL and so did some others.—Muhammad Aslam