Payouts by some of the leading companies, mainly PSO, ICI, Habib Bank Limited, United Bank, Packages, IGI Insurance, Unilever Pakistan Foods, Rafhan Maize and some others were well above market expectations and significantly added to the meteoric rise of the index.
If all went well on the elections day (Feb 18), there was a possibility that the current run would continue as dividend announcements by some leading companies were due before the end of the current month.
Last week the KSE 100–share index rose by 415.51 points at 14,353.84 adding Rs129 billion to market capital at Rs4,424 billion over the previous week as heavy weights were massively targeted at the current lower levels apparently on the strength of higher dividend and bonus shares announcements.
Analysts said the fact that it managed to sustain the index level of well over 14,000 points showed that the worst was over as far as the pre-election trading scenario was concerned.
There is a loud whispering in the corridors of the bourse that some of the well-informed brokers have already found cue about the winning party in the national elections and is actively engaged in moping operations on selected counters.
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But some others said there was a loud whispering in the market that some of the foreign investors were back and were extending massive support to leading base shares, which was ensuring higher capital gains even if the market took a downward course from the current higher levels.
“Positive foreign comments by the international rating companies on the post-election market seem to be the chief stimulating factor behind the current run-up”, analysts said.
Cash dividend of 40 per cent by Habib Bank, plus 10 per cent bonus shares, 150 per cent final by Al-Ghazi Tractors, 100 per cent interim by Shell Pakistan, 50 per cent interim by JS Global, 11.5 per cent interim by Hub Power followed by several other higher payouts by ICI Pakistan, PSO and MCB also kept investors’ interest alive throughout the week.
The bulk of the strong dividend-linked buying was confined in the bank, cement and oil shares triggered by reports of higher earnings allying fears of pre-election plunge.
Whether or not the strong pre-election technical rally, which pushed the KSE 100-share index well above its psychological barrier of 14,000 points, could be carried through next week is, however, anybody’s guess.
The MCB, National Bank, Lucky Cement, Engro Chemical, OGDC, PTCL, Bank Alfalah and all other index-heavy weights led the rally and staged smart recoveries.
“It is not an illusion but a reality built on higher earnings by the leading corporate during the last year”, said a leading analyst Hasnain Asghar Ali. “Cash dividend and bonus shares are expected to be well above previous levels”, he added.
“No one could miss some of the positive “financial leaks” about the profits and the current lower levels reached by most of the pivotal, provides and an attractive bait for quick capital gains or the both,” says another analyst Ahsan Mehanti.
Forward counter: Active trading was also witnessed on the cleared list in sympathy with the bullish trend in the ready section. Leading shares followed the lead of their counterparts in the ready section.
The most active among them, which finished higher, were led by OGDC, National Bank, MCB, Bank Alfalah, Bank of Punjab, Lucky Cement, PTCL and some others, closing on balance on the higher side.—Muhammad Aslam