STOCKS climbed to new seasonal peak levels during the last week as investors were not inclined to miss the rising market amid predictions of a sustained run-up aided by the lure of an imminent sell-off of some leading shares and an expected increase in the margins of oil marketing companies.
Persistent buying both from local and foreign investors in these shares continued to inspire strong sympathetic support on other counters intensifying the market run-up.
The market capitalization hit the two-year peak level at Rs420 billion adding another Rs18 billion to the total during the week and inching progressively to regain its lost glory of mid-90s, when it soared to Rs610 billion after the index touched the all-time peak level of 2,662 points.
After having breached through the psychological barrier of 1,800 points for the third time during the last couple of months, the KSE 100-share index appeared to have at last crossed the rubican and well set for a fresh forward thrust to its new chart point of 1,900.00.
It finally finished the week around 1,851.02 seeking to break the 1,900 index level as bulls were not inclined to take a technical breather amid talk of an imminent price flare-up on the strength of basic economic fundamentals, strong rupee and rising forex reserves.
At one stage early it did cross the barrier of 1,850 but late selling in Hub-Power ahead of its spot trading pushed it again down below it.
The market’s bullish mood was well-pronounced in the forward sector where the PSO, the MCB, the ICI Pakistan and the Engro Chemical passed through emergency clearing owing to price flare-up above the daily ceiling rate of Rs1.50.
Building-up of strong positions on the forward counter reflects that long-term investor outlook is fairly bullish and that could have led the index to new peak levels in the recent past.
Bulk of the upcountry support remained confined to low-priced Dewan Salman and D.G. Khan Cement, which ensure a substantial price appreciation in the sessions to come on the strength of their higher sales.
Energy sector also remained under speculative squeeze as the PSO and Shell Pakistan soared to new recent peak levels followed by market talk of increase in dealer margins. The Hub-Power did not look back despite being traded on spot. Dividend announcements, notably from the Al-Ghazi Tractors and the SK&F Pakistan at 100 per cent final and 20 per cent were in line with the market thinking but post-dividend price flare-up in the former was in line with the investor perceptions. Its total payout on a five-rupee share, together with 50 per cent interim rises to 150 per cent, a hefty figure judged by any financial standard.
A lot of optimism was generated after the news of the approval of listing of the Habib Bank and the Initial Public Offer (IPO) of its five per cent shares on the pattern of the National Bank reached the market and is well-reflected in the snap rebound, a leading stock analyst Mustafa Iqbal at the Moosani Securities said.
As the developing financial scenario indicates, investors are eyeing the index level of 2,000 during the next couple of weeks as the process of privatization could further intensify the current run-up, he adds.
“The government may not be in a haste but the process of privatization of the state-owned units is progressively expanding”, stock analysts at the W.E. Financials say, “the successful float of the National Bank shares has encouraged the Privatization Commission to go by the same procedure”.
If all goes well with the official perceptions the entire process of sell-off, which also included mega issues such as the PSO and the PTCL is expected to be completed by the end of the current fiscal ending June 30, 2002.
“Foreign investors are already in the market and are taking positions on the shares, which are now in the process of disinvestment”, says Faisal of the AHRL “their presence could well prove a stabilizer when the sell-off is completed”.
The perception that the market is heading for a big boost in the months to come, which may protect it from the proverbial vulnerability as investors will have well-protected other safe havens too, stock analysts at the AHRL predict.
Low volume reflects that the market is currently in a consolidation phase and could resume its sustained upward drive in the sessions to come on the strength of positive news from the economic front.
Dividend news coming in from various sectors, notably from the textile counter are encouraging and in a way aiding the market sentiment, brokers said.
Energy shares led the market advance under the lead of the PSO and the Shell Pakistan, which posted gains ranging from Rs10 to 12, followed by Dewan Salman, Bannu Woollen, Al-Abbas Sugar, Attock Refinery, the PIAC and Millat Tractors. There was a long list of other good gainers also including the National Bank, which roared to business after mid-week and closed around Rs22.
The Wyeth Pakistan, which suffers fall early for no apparent bearish reason but later recovered the loss was leading among the losers followed by the KASB & Co, Shafiq Textiles, Pakistan Oilfields, General Tyre, and Shahtaj Sugar.
Trading volume again crossed the figure at 1.1 billion shares as the Hub-Power and the PSO were actively traded before being spotted. The PTCL, the ICI Pakistan, the Sui Northern followed them.
Other actives were led by the National Bank, the Fauji Fertiliser, the FFC-Jordan Fertiliser, Adamjee Insurance, the KESC, Dewan Salman, the WorldCall Payphones, the D.G.Khan Cement, the Maple Leaf Cement, the Japan Power and several others.—Muhammad Aslam