The early bear-run on the stock market was halted in the later part of the week as bulls moved in and made active short-covering at lower levels followed by the revival of strong institutional buying.
Although, the KSE 100-share index failed to reach the previous week’s closing level, it did recoup a major part of the initial losses and if all goes well its next journey could be well above the 1,900 level.
“In the backdrop of positive mirco economic indicators — on-going privatization programme and steady inflow of foreign funds — only fools could sit on the sidelines”, stock analyst Mustafa Iqbal at the Moonsani Securities says.
The same views are held by Faisal Abbas of the Ahra but he did not rule out the possibility of technical corrections here and there, without halting the market’s upward journey.
After having met its technical demands in the form of correction, Karachi stocks rose from the early lows on late burst of active short-covering in most of the pivotals and finished partially recovered.
The KSE 100-share index, which at one stage has fallen as low as 1,817 points settled well above its resistance level of 1,850 thanks to the relative strength of leading base shares, notably the PTCL, the PSO and the Hub-Power. It finally finished at 1,868.12 as compared to 1,894 at the last weekend, 25.88 points.
“The technical correction that follows each rise adds to the strength of the market rather than creating panic”, says a leading member of the KSE, “the index has, during the last about two months risen by 700 points or 35 per cent needed pruning to resume its upward journey to the coveted index level of 2,000 points and that came in the form of selling at higher rates.
Adamjee Insurance was again in the news after a hostile take- over bid by the chairman of the Muslim Commercial Bank, who has already cornered 40 per cent of its floating stock to have a say in its management through his directors.
The management of Adamjee Insurance has sought court intervention through a legal suit claiming that the MCB’s take-over bid violates the rules and its chairman may be asked to sell his shareholding on the open market.
How the court views the merit of the case will be known after sometime but the share of Adamjee Insurance is falling since reports came in the market.
However, institutional buyers remained unmoved apparently eyeing further lower levels on the blue chip counters and then to resume covering operations.
“I don’t think the index could fell below the next psychological barrier of 1,900 points”, predicts a leading stock analyst,” saying leading base shares have already hit attractive lower levels ensuring handsome capital appreciation for any willing investor”.
“The next couple of sessions could be lean because of still pending record badla volume of well over 5 billion shares”, another claim adding “no one could deny the fact that the rebound is now overdue”.
Volume figure was slightly above the initial level at 213 shares as brokers are still trying to adopt new trading system introduced a day earlier. The new trading system introduced after several mock trials is capable of taking in daily transactions of 300 million to 500 million shares, without overloading the KSE computer system.
Floor brokers said the market is still passing through a technical correction and could fall further during the next couple of sessions and in the process jobbers and weakholders are expected to be eliminated.
But stock analysts at the W.E. Financials predict the blue chips have reached the level at which institutional support could remerge any time and could lift the index from the current lows.
The market has already passed through a necessary correction and the technical rebound has become overdue now, they added.
However, some other stock analysts say the market could witness further pruning as the buying support may take some more days to start moping operations at the lower levels.
Minus signs again dominated the list, under the lead of Wyeth Pakistan which has resumed its upward journey after, falling early but Fateh Textiles, remained under pressure and fell sharply in each session over the week.
Other prominent losers included Aamjee Insurance, Javed Omer, Al-Jadeed Textiles, Modern Textiles, Engro Chemical, Sitara Chemicals, the PSO and Lever Brothers. But after mid-week they recouped earlier losses.
Leading gainers were led by the Treet Corporation, Atlas Honda and Gillette Pakistan, followed by the PICIC, Ayesha Textiles, M.Farooq Textiles, Kohat Cement, Muslim Insurance and several others in the mid-week run-up.
Owing to Monday’s holiday on account of 10th of Muharram, traded volume fell to 664 million shares from the previous 757 million shares as leading investors were very choosy earlier but later they resumed normal activity.
The PTCL and the Hub-Power accounted for about 65 per cent of the total volume followed by the Sui Northern, the ICI Pakistan, Dewan Salman, the National Bank, Fauji Fertiliser, the KESC, Engro Chemical, Bank of Punjab and several others. The notable feature was that the low-priced issues, notably the PTA and the FFC-Jordan Fertiliser remained in strong speculative demand throughout the week and rose sharply higher.
Forward counter: Bulk of the buying and selling operations on the forward counter were confined to the PTCL and the Hub-Power, which remained in speculative demand followed by the PSO, the ICI and Engro Chemicals.—Muhammad Aslam