KARACHI, June 25: The initial investors’ reaction to a $3-billion US aid package was fairly encouraging as institutional-led support figured prominently on all the counters on Wednesday, pushing the KSE 100-share index higher by 41 points at 3,386.48. Market capitalization also soared to a new high of Rs754.157 billion, an increase by Rs10 billion.
But leading analysts were not that optimistic about a lasting positive impact of the five-year US aid package on the market as they have already read through the technicalities involved in the entire episode.
Together with the renewed virtual craze for the cement and auto shares, an ambitious disinvestment plan during the next quarter starting from July 1, also aided the underlying sentiment.
The KSE 100-share index surged by 40.96 points at 3,386.48, only 16 points below its next target of 3,400 and beyond, signalling that the widely speculated level of 3,500 is now well within reach.
The minister for privatization and investment during his Tuesday’s meeting with the KSE members outlined the salient features of an ambitious disinvestment programme during the next three months.
According to him, five per cent shares of National Bank, Sui Southern Gas, PIAC and Oil and Gas Development Corporation will be disinvested through the stock exchanges before September 30. Others, including KESC and PSO, will follow after the announcement of the final bidding date for the latter within next two weeks.
However, his statement failed to stimulate new buying as much of the details of the next quarter plan were already known to the members.
Analysts said although opinions were divided over the size of the US aid package, its immediate impact on the stock trading was positive, but the absence of bargain-hunters and leading speculators tells a different story.
“The $3 billion aid is a peanut for a frontline country against the US war on terrorism, notably in the backdrop of financial costs involved in the Afghan war,” some said. “The market may not be in position to sustain the run-up in the long run.”
Some others, however, claim it is not the size of the amount that matters it is the US pat on president’s back for his cooperation against war on terrorism, which will finally count leading to close relations between the two countries.
According to details, half of the package will be used to retire the US debt of $1.8 billion and the rest for defence spending and the social sector projects.
Bulk of the support originated from the financial institutions, while other leading bulls were in two minds about the impact of the aid package on the market during the next couple of weeks.
Plus signs dominated the list under the lead of Gatron Industries, Javed Omer, EFU Life Insurance, Dewan Khalid Textiles and Mari Gas after the announcement of second interim at the rate of 10 per cent, Crescent Steel, Atlas Battery, Atlas Honda, HinoPak Motors, Tri-Pack Films and Packages, which posted gains ranging from Rs4 to Rs5.70. The largest rise of Rs14 was noted in Fateh Textiles for want of floating stocks. There were many other good gainers also.
Losers were led by some of the leading textile shares, notably Quetta Textiles, Gul Ahmed Textiles, Mehmood Textiles, Sapphire Fibre, Noon Sugar, Treet Corporation and Colgate Pakistan, off Rs2 to Rs5.
Trading volume rose further to 483m shares from the previous 434m shares as gainers maintained a strong lead over the losers at 249 to 138, with 54 shares holding on to the last levels.
Dewan Salman topped the list of most actives, higher by Rs1.25 at Rs19.40 on 51m shares followed by Hub-Power, steady by 20 paisa at Rs37.20 on 45m shares, D.G. Khan Cement, up Rs1.95 at Rs28.15 on 39m shares, PTCL, up 35 paisa at Rs28.50 on 38m shares and Lucky Cement, higher Rs1.50 at Rs19.45 on 37m shares.
Other actives were led by Maple Leaf Cement, higher by Rs1.50 on 36m shares, Nishat Mills, up Rs2.60 on 29m shares, Chakwal Cement, firm 30 paisa on 18m shares, Southern Electric, higher by 55 paisa on 13m shares and Engro Chemical, up 70 paisa on 11m shares.
FORWARD COUNTER: PSO came in for strong demand after the news that its sell-off date will be announced during the next two weeks and rose by Rs1.75 at Rs228.30 on 7m shares followed by Hub-Power, higher 30 paisa at Rs37.25 on 6m shares, PTCL, up 26 paisa at Rs28.41 on 4m shares, Dewan Salman, higher Rs1.35 at Rs19.45 on 3m shares and Sui Northern Gas, up 27 paisa at Rs34.47 on 2m shares. Their July settlements also rose by the same amount.
MCB, Nishat Mills and ICI Pakistan also came in for active support and finished higher by Rs2.65, Rs2.64 and Rs1.50, respectively, amid active trading.
DEFAULTER COMPANIES: Metropolitan Steel led the list of actives, up one rupee at Rs16 on 0.284m shares followed by Suzuki Motorcycles, easy 30 paisa at Rs13 on 0.199m shares and S.S. Oil, easy 15 paisa at Rs6.80 on 61,500 shares. Others were modestly traded.
DIVIDEND: Exide Pakistan, cash 20 per cent for the year ended June 30, 2003; Mari Gas, second interim at the rate of 10 per cent, book closure from July 18 to 24; Asia Insurance, right shares 60 per cent; and Automotive Battery, nil.