Leading companies including Colgate Palmolive and Clover Pakistan along with OGDC and Pakistan Petroleum and some others have already announced above market expectation dividends but the perception of lean period during the post-dividend sessions worried investors.
The technical rebound was overdue in an oversold market, which has been under pressure during the last five sessions and has caused losses both in value and volume under the lead of leading base shares, manifested itself in a big way aided by higher corporate announcements.
But opinions are divided over the near-term future market outlook. Some say there could be a big shakeout as the dividend season is almost over and uncertainty created by the no-confidence move against the prime minister could also take its toll.
Lifting of ban on short selling on the forward counter by the next month could work both sides of the fence after its official approval by the SECP, but investors have decided to evaluate the impact of this decision on the stock trading.
Some others did not rule out the possibility of a massive rebound after the market meets its technical demands being in an overbought position as most of the fundamentals are positive and that would enable it to keep firm around the index level of 10,000 plus.
The KSE 100-share index showed a robust recovery and was quoted higher by 156.48 points at 10,562.88 as compared to 10,406.40 points a week earlier as leading base shares ended higher under the lead of OGDC, PTCL and some others. Market capital also rose by over Rs41 billion at Rs2,951.471bn.
But higher dividend by PSO, Shell Pakistan, OGDC and Pakistan Petroleum and expectations of similar announcements by the others whose board meetings are due aided to recovery.
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“Heavy buying in the leading oil shares appears to be a belated reaction to higher payouts and expectations of similar announcements by others reinforced the investor perceptions of a fresh price flare-up on selected counters,” predicts a leading stock analyst Ahsan Mehanti.
Above analysts prediction final payout of 37.5 and 55 per cent by two oil giants — OGDC and Pakistan Petroleum — did boost trading on the stock market, but investors seem to be worried over some other negative developments on the political front adhered to the sidelines most of the time and indulged in alternate bouts of buying and selling.
Having a massive weightage of 22 per cent in the KSE 100-share index, OGDC put it back on the rails after last week’s persistent decline and added to its early gain.
The final payout of 37.5 per cent by the Oil and Gas Development Corporation (OGDC), making the total for the financial year ended June 30, 2006 to 89.50pc as it has already paid an interim of 52 per cent was on the higher side of the analysts prediction but it failed to enthuse investors. A total cash dividend of 90 per cent by Pakistan Petroleum was also not well-received in the market.
The EPS of OGDC at Rs44 and that of Pakistan Petroleum at Rs19.54 added to their share values and pushed them above the recent lower levels and so were National Bank, MCB, PTCL and some others.
Its share value followed the post-dividend line of other oil giants including PSO and Shell Pakistan, as despite higher payouts their share values remained volatile, analysts said.
“There is a loud whispering in the market that a section of leading brokers may have inside information about the payout prior to the official announcement and push their prices up and then indulge in post-dividend selling at the highly inflated levels,” says a leading analyst, adding “small investors follow them in panic and big ones grab the entire floating stocks at the dips”.
He said small investors have been at the receiving end after regular intervals decided by the big ones since March 2005 market crash and had lost billions of rupees in the process as most of the corrective steps have failed to arrest speculative activity.
FORWARD COUNTER: Despite mid-week pruning at the higher levels, speculative issues on the forward counter also followed the lead of their counterparts in the ready section and rose appreciably. Leading gainers among them Pakistan Petroleum, Pakistan Oilfields whose dividend is due, National MCB Bank and some others finished with good gains.—Muhammad Aslam