Despite massive battering at the weekend session, stocks performed well during the previous week as positive news in quick succession did not allow the investors to have an overview of their inventories.
Both the news, an increase in the margins of the oil marketing companies and the Expression of Intent (EoI) for the sale of 51 per cent controlling shares of the oil giant, Pakistan State Oil (PSO) have given the needed boost and depth to the market as was reflected by the astounding rise in the KSE 100-share index, which crossed the coveted level of 1,900 points before the weekend selling pushed it down.
After a lot of wavering and abortive bids, the index at last crossed the rubican and virtually raced toward its new chart point of 2,000 followed by massive buying in the energy shares and most of the other pivotals under the lead of the PTCL.
But at 1,940-point level, weekend profit-selling caused by higher badla rates and large outstanding business pushed it down to finish below the coveted chart point but investors call it a technical pause in an oversold market.
The market received a major boost and more depth followed by increase in the margins of the oil marketing companies. Massive buying in the PSO triggered buystops on other counters, pushing the market capitalization by Rs17 billion at Rs436 billion, billed as a 30-month peak level. But late selling in the pivotals pushed it to close with a modest rise of Rs3 billion at 422 billion, as at the weekend it eroded Rs14 billion from the peak level.
“The increase in the margin could well prove a prelude to the sell-off of the PSO to some strategic investor and bulls were not that fool to miss the signal”, says a leading stock analyst Ali Reza of the Moosani Securities.
At the fag-end of the week all roads led to the Khalian Road, the offshoot of the KSE premises as no one was inclined to miss the rising market.
The KSE 100-share index after soaring well above the psychological barrier of 1,900 points at 1,940 as compared to 1,851.02 a week earlier, failed to sustain and fell to close around 1,880.04, up about 30 points from the previous close. However, it has demonstrated in more than one ways that it has the potential to rise to any highs in the given situations.
Although, both the local investors and the institutional traders continued to build-up long positions, there was no evidence of foreign support even in some of the leading MNCS. A section of foreign funds is watching the performance of the KSE index and may enter the market after it hits their pre-determined level probably of 2,000 points ensuring that the market had stabilized at a viable level and there was no possibility of an imminent bear-run, says a prominent member of the KSE adding their entry could further boost the index above the 2,000-point level.
“A wave of sell-off of some mega issues during the next couple of months did not allow the investors to sit idle before prices go further higher”, stock analyst Faisal Abbas of the AHRL says, “everyone appears to be in a haste to grab as many shares as their financial position allows”.
The other contributory factor was the reports of pressure on the floating stock on some counters, which is also aiding the price increase in selected sectors.
Though not precisely reinforced by the official export figures, the lure of increase in quota and some tax exemptions by the European Union and the US continued to inspire fresh buying on the export sector, notably the textile one.
The general perception, therefore, is that the KSE 100-share index could have an overview what it had left behind after hitting its new chart point of 2,000.
“The index is progressively rising, of course after consolidating earlier gains, to the coveted level of 2,000 well ahead of the sell-off some mega state-owned units and no one is inclined to miss the rising market where blue chips still ensure handsome capital gains”,analysts at the W.E.Financials say.
Dividend announcements from all sectors including textile are above expectations and are evoking good interests on their respective counters, they added.
Most floor brokers believe there is a combination of positive factors, which could keep the market in a buoyant moods in the coming months, irrespective of its overbought position.
Energy shares led the market advance after the increase in margins and took the entire market along with them to new peaks, major trend setters being the PSO and the Shell Pakistan. The former was so violent that it broke the circuit braker more than once as investors were not inclined to miss it at the current rate.
Prominent gainers were led by the Reckit and Benckise, Clariant Pakistan, Shell Pakistan, Wyeth Pakistan, and the Lever Brothers, Nestle MilkPak, Siemens Pakistan, the BOC Pakistan, the ICI Pakistan and several others.
Others to follow them were the 9th ICP, Javed Omer, the MCB, Ideal Energy, the PSO, Millat Tractors, Bata Pakistan and Tri-Pack Films.
Major losers included Singer Pakistan, Metro Life Assurance, Shahurad Sugar, and the Aventis Pharma. But most others managed to finish with clipped gains owing to the late selling.
Trading volume was maintained well above the one billion mark at 1.118 billion shares, bulk of which was again shared by the PTCL, the Hub-Power, the PSO, the ICI Pakistan and the Sui Southern.
Other actives were led by the National Bank, the MCB, Engro Chemical, Fauji Fertiliser, Dewan Salman, Japan Power, the KESC, Pakistan PTA, the FFC-Jordan Fertiliser, Nishat Mills and several others.—Muhammad Aslam