Stocks finished the eventful week on a bullish note as positive developments, which followed in quick succession, did not allow the investors to taken even a technical breather or look back on their inventories.
An increase of 104 points in the KSE 100-share index and rise of Rs22 billion in market capitalization to Rs338 billion from the previous Rs316 billion, speaks of the major change in the hereto uncertain market.
What seems to have triggered the buying euphoria at the weekend session were strong rumours about the restoration of diplomatic relations between Pakistan and India, which analysts feel could be first step to end the war phobia.
The foreign secretary’s visit seems to have set ball of peace rolling after brokering a tentative agreement between the two countries, brokers said.
Perceptions of peace and fading out of war clouds after Colin Powell’s visit to Pakistan and India and the president’s peace moves seem to have given the needed psychological boost to stock trading as investors were not inclined to take even a technical breather and continued to build up long positions in a broad-based rally.
There were still some “ifs and buts”, but investors opted for a kill and for good reasons as no “bigger risks were involved after buying at the prevailing prices, notably on the blue chip counters and some secondary issues”, says a leading KSE member.
The market’s bullish mood was more pronounced on the forward counter where leading among the blue chips finished with limited gains above the ceiling rate of Rs1.50 for Engro Chemical, the ICI Pakistan and the PSO — the biggest rise of Rs4.50 equivalent to three emergency clearing was recorded in the PSO.
An eight per cent increase in the index has reinforced the investors’ confidence that the president’s peace overtures after banning the extremist religious parties followed by a massive crackdown on their activists and positive hailers from the world leaders including the US president could allay the fears of an imminent war.
“The market’s reaction to the president’s speech though is spontaneous but is billed as psychological rather than real as 70 per cent of support was confined to the Hub-Power and the PTCL, which together hold a weightage of 43 per cent in the index,”, analysts at the AHRL say “but it is bold enough to trigger buystops in the coming weeks”.
“Much will depend on the fact whether or not it is sustained in the coming sessions”.
Its buoyant outlook was also evident from a steep rise of 104 points or about eight per cent in the KSE 100-share index, which not only crossed the barrier of 1,400 points but managed sustained it firmly after finishing around the week’s best level of 1,479.00. Market capital rose by Rs22 billion at Rs338 billion.
Its performance matched that of the Mumbai stocks, which reacted the same way as it did anticipating progressive withdrawal of troops from the war-like positions.
“Without awaiting the official Indian response to the steps taken by the president to cross-border terrorism, investors’ initial reaction appears to be a big yes for farewell to arms”, says a leading floor broker.
The banning of major extremist religious parties and the president’s vow to curb terrorism including the cross-border one could go a long way as a confidence-building measure between the two close neighbour, most brokers believe.
“It was a judicious blend of both peace and war overtures”, a leading stock analysts commenting on the president’s speech says” it is followed by the troop withdrawal and will open floodgate for foreign investment”.
“It was also a big morale booster for a market weighed down by an imminent fear of war”, stock analysts at the W.E. Financials said adding, “there is no reason to believe that the bullish tempo may not be sustained in the sessions to come provided India reacts the same way”.
The same view is held by the stock analysts at the Moosani Securities as fading of war fears could attract foreign fund buying at the prevailing lower levels.
Although, the bulk of support was confined to the Hub-Power and the PTCL, which together accounted for 110 million shares, out of the total volume of 156 million shares, other blue chips too, raced towards their pre-reaction levels on active short-covering, the big gainers being the PSO, Engro Chemical and many others.
Plus signs were strewn all over the list under the lead of Millat Tractors,the IGI Insurance, the PSO, Shell Pakistan, Adamjee Insurance and Rafhan Maize. Pak Reinsurance rose by Rs46.50 against its face value of Rs100.
The ICI Pakistan, Engro Chemical, Fauji Fertiliser, Hub-Power, Javed Omer Lever Brother, the MCB and Pak-Suzuki Motors also rose sharply.
Losers were led by Nestle MilkPak, off Rs4.75 on selling for no apparent bearish reason, Fateh Industries, Dawood Hercules, Rupali Polyester and Gatron Industries, the biggest loss being in Wyeth Pakistan and some other pivotals.
The turnover figure further rose to 823 million shares from the previous 572 million shares — thanks to massive activities in the Hub-Power and the PTCL.
Other actives were led by the PSO, Sui Northern, Engro Chemical, Fauji Fertiliser, the ICI Pakistan, Adamjee Insurance, the MCB, Nishat Mills, Dewan Salman, Lucky Cement, D.G.Khan Cement and Maple Leaf Cement on buying triggered by the perception that the exports could rise after the reconstruction work starts in Afghanistan.—Muhammad Aslam