KARACHI, Oct 22: Boom-like conditions were witnessed on the stock market on Monday as the KSE 100-share index breached through the psychological barrier of 1,300 points just in one go, up 6.6 per cent or 84.41 points on massive speculative buying triggered by two per cent cut in discount rates by the State Bank and an expected big aid package.
“The bank credits may not be that cheaper as the speculative forces make them look like as only post-cut weeks will show how the lenders treat their clientele but reaction was positive and in line with future investor perceptions”, says a leading broker.
The 6.6 per cent increase in index, which raised the total gain to 20 per cent during the last couple of weeks, may owe its strength to some solid insider information not shared by the local expecting the leading foreign fund managers but followed the lead more actively as was reflected by a large single-session volume of 275 million shares.
The 84-point rise in the index means an increase of over Rs.18 billion at Rs.332 billion, in the total market capitalization, although it needs a dozen more such pushes to attain its pre-reaction level of Rs.610 billion touched in mid-90s boom. However, the increase added to the savings of small investors significantly.
The index finally breached through the psychological barrier of 1,300 points at 1,351.46 points as compared to 1,267.05 at the last weekend. Volume soared to a recent level of 275 million shares. The highest-ever figure is 500 million shares in a session recorded couple of years back.
It was a big rise in the backdrop of the war-like conditions but not the largest as the market has on its record half a dozen single session gains of well over 100 points including the highest at 130 points some years back
“The market virtually witnessed a scramble for the blue chips at the current levels reminiscent of boom conditions as both the bulls and bears have joined hands to demonstrate that the bull-run will prevail”, stock analyst at the Finex Securities say.
It was judicious blend of massive local as well as foreign buying, reflecting no one among them is inclined to miss the rising market at the prevailing attractively lower levels, although it was terribly selective and did not go beyond certain blue chips shares.
Apart from the big cut in discount rate, which could well lead to cheaper credit lines for the investors, expectations of a big aid package as promised by the various visiting western ministers as a reward for support against terrorism also kept the market morale terribly bullish, he adds.
“It was not a single positive factor, which triggered buystops from all and sundry but a combination of stimulating news, which did not allow investors to sit on the sidelines”, stock analysts at the W.E. Financial commenting on the market’s spectacular upward journey say.
Reports of higher final dividend by the Hubco management, higher worrying results from the PTCL and a relative slowdown in the US attacks on Afghanistan, which investors think could lead to ceasefire in the coming days.
Big gainers were led by Millat Tractors, Gul Ahmed Textiles, Liberty Mills, PSO, Al-Ghazi tractors, Glaxo-Wellcome Pakistan, which rose by Rs.4.00 to Rs.7.50.
But biggest price flare-up was noted in Shell Pakistan, Lever Brothers and Wyeth Pakistan, up by Rs.11.95, 23.50 and Rs.32.00 respectively. All other shares also rose under the lead of textiles and energy sectors.
Losses on the other hand were fractional barring Atlas Honda and Cherat Papers, which fell by Rs.1.25 to 1.50 on selling at the higher levels.
Trading volume rose further to 275 million shares from the previous 83 million shares as 181 shares finished higher, while 21 fell, with 22 holding on to the last levels, out of 224 actives.
Bulk of the buying remained confined to PTCL on market talks of higher dividend owing to steep rise in earnings, sharply higher by Rs.1.75 at Rs.17.40 on 119m shares, followed by Hub-Power, up Rs.1.65 at Rs.20.45, on 86m shares, PSO, sharply higher by Rs.6.70 at Rs.110.70 on 12m shares, ICI Pakistan, up Rs.2.40 at Rs.42.90 on 9m shares and Engro Chemical, firm by Rs.2.00 at Rs. 53.45 on 7m shares.
Other actives were led by Engro Chemical, up Rs.2.00 on 6.555m shares, Nishat Mills, firm by Rs.1.35 on 6.300m shares, MCB, up one rupee on 3.631m shares, Dewan Salman, higher 90 paisa on 3.487m shares and Fauji Fertilizer, steady 45 paisa on 2.459m shares.
FUTURE CONTRACTS: Speculative issues on the forward counter also followed the lead of their counterparts in the ready section and rose appreciably under the lead of PSO, which came in for successive emergency clearing and finally finished higher by Rs.5.30 at Rs.110.00 on 0.203m shares followed by Engro Chemical, higher by Rs.1.90 at Rs.53.40 on 0.120m shares.
PTCL proved to be the most active scrip, up one rupee on 2.388m shares followed by Hub-Power, higher Rs.1.65 at 19.80 on 0.467m shares.
DEFAULTER COMPANIES: Shares of five companies came in for active trading under the lead of Saitex Spinning, up 10 paisa at Rs.0.55 on 8,000 shares, followed by Allied Motors, firm also by the same amount at Rs.3.20 on 2,500 shares and Suzuki Motorcycle, higher 20 paisa at Rs.1.10 on 1,000 shares.
DIVIDEND: Pak Datcom, cash 7.5 per cent plus bonus shares at the rate of 20 per cent for the year ended June 30, 2001, Javed Omer Vohra, nil for the same period.