Karachi stocks last week roared back to normal trading activity as a combination of positive factors lured investors back into the rings, enabling the KSE 100-share index to cross the psychological barrier of 1,400 points at 1,404.
The danger of war with India after the threatening statements from its top leaders loomed large. The massive troop movement in Rajasthan worried the investors who took an optimistic view of the developing political situation and preferred calculated risks.
There were more good news than the investors might have expected but the major breakthrough came after the all-out support extended by China. If all goes well the implementation of broader guidelines — both on political and economic fronts — could lead to economic prosperity in the years to come.
The signing of trade agreements with China and its support to Pakistan policies appear to have boosted the market sentiment more than any other stimulating news. Other contributory positive factors were steep rise in foreign remittances, strong rupee, foreign aid from the western countries and the consequent perception of a robust economy. But tension on the border and massive Indian troop build-up in Rajasthan worried investors, though war may not be around.
Despite final victory of the bulls, the underlying sentiment remained highly volatile as investors were unsure about the border situation owing to successive threats by the Indian high-ups in the wake of terrorist attack on Lok Sabha, blaming Pakistan.
But the advent of institutional support on the blue chip counters lured general investor back in the market and the consequent robust rally.
However, relative weakness of the energy sector under the lead of oil marketing giants, the PSO and Shell Pakistan on the perception of lower annual profits, due to successive cut in selling prices of oil products, weighed heavily against the sentiment despite credible performance of the fertilizer shares. But later recovery in them indicated that it has recouped the initial inhibitions.
The market opened with a loss of 10 points after four days closure on account of Eid holidays on early selling triggered by the cross-border tension on the line of control in Kashmir and fears of an imminent Indian attack but the mid-session saw the return of leading institutional traders and reversal of the scale. “War with India may not be around because of Afghan situation and possible foreign intervention, the fears among the weaker links is there and that could keep the market volatile despite the major thrust of the year-end buying”, says a leading stock broker.
The KSE 100-share index finished with a gain 24 points at 1,03.97 as compared to 1,380.08 on last Saturday, the last session before Eid holidays.
“The index after technical corrections, is steadily rising to stay firm above the psychological barrier of 1,400 points before the year is out despite some external disruptions”, stock analysts at the W.E. Financials predict adding, “everyone is awaiting the advent of the year-end buying and portfolio adjustments”.
The board meeting of the Fauji Fertiliser, a giant among the listed shares, has evoked good interest in this sector as a whole including the FFC-Jordan Fertiliser, where production is suspended owing to technical reasons.
“Apart from an expected revenue growth in the entire fertilizer sector because of higher sales, its performance will be largely gauged by the rate of the interim dividend by Fauji Fertilisers”, stock analysts at the Moosani Securities said.
Anything below 20 per cent or Rs2 on a 10-rupee share may not work at least for the near-term, although final could be more impressive.
Other blue chips shares including the Hub-Power and the PTCL came in for strong support but energy shares remained under pressure under the lead of the PSO and Shell Pakistan, which suffered sharp decline of Rs1.65 and 2.45 at Rs97.60 and Rs174.50 respectively but later support allowed them to finish fully recovered.
Leading gainers were led by the Pakistan Services, Millat Tractors, Essa Cement, Legler Nafees, Crescent Steel, Fauji Fertiliser, Glaxo-Wellcome Pakistan, and Bhanero Textiles, which posted gains.
Losers were led by A.A.Textiles, Nazir Cotton, Ghani Glass,IGI Insurance and ICI Pakistan, which fell modestly and so did Attock Refinery, Ideal Spinning, and Paramount Spinning.
But the market advance at the weekend session was led by the textile sector on the perception of reopening of the Afghan market during the next couple of months and most of them evoked good interest at the lower levels and so did the cement shares.
Trading volume expanded to an average figure of 75 million from the previous 35m shares as the leading base shares were actively traded under the lead of Hub-Power and the PTCL followed by the PSO and the ICI Pakistan.
Other actively traded shares included Engro Chemical, Sui Northern, Fauji Fertiliser, the MCB, Nishat Mills, Adamjee Insurance and several others.
Speculative issues on the forward counter followed the lead of the ready section, although bulk of the business remained confined to Hub-Power, the PTCL, the PSO, Engro Chemical. The on-balance closing was on the higher side.—Muhammad Aslam.