Stocks remained in a bullish frame of mind throughout the post-Eid holiday week. Positive news followed in quick succession, not letting investors rethink on the market’s outstanding performance.
The steep rise in market capitalization of over Rs22 billion demonstrates significant value-addition in most of the pivotals, although the buying was not that broad-based as it should have been in boom-like conditions.
New records, both in terms of massive activities and sharp price increase were established on the forward counter in pivotals such as the Hub-Power and the PTCL. The hedging operations remained at peak to avert undue financial risks in the ready section, if corrective forces were to manifest themselves in a bigger way on technical grounds.
There could be no two opinions about the market’s current sustained rise to new highs in the shape of the KSE index, but a section of leading analysts were worried over the fact that it was not matched by the price increases on those counters, which had initiated its meteoric rise. All were awaiting for this.
The KSE 100-share index roared back and firmly settled above the 2,450-point level and demonstrated in more than one ways that it may not be too easy to pull it down by way of technical correction or by speculative selling from recent highs. But indications are that its next chart point could be 2,500 points, possibly before the year is out.
The advent of strong foreign fund-buying on the selected MNCs, after the upward revision of Pakistan’s long-term foreign and local currency sovereign credit rating by the Standard & Poor’s Rating Services, seems to have given the needed depth to the market.
The post-Eid holiday week, though marked by early weakness, saw the KSE 100-share index above the crucial index level of 2,400 points and analysts predict its next chart point could be 2,500 points, thanks to prevailing buying euphoria in most of the pivotals. It finally ended around 2,452 points, up 107.11 points or by six per cent — an outstanding performance and a positive nod to new governments, both in the centre and in the provinces.
The question now being debated among the analysts is, whether or not the index could improve its all-time peak level of 2,662 established during the mid-90s? Many think it could, as “too many rupees are chasing too few choices and dividend-yielding stocks, if all goes well in line with the current financial perceptions”.
The breach of the psychological barrier of 2,400 points followed by heavy buying in leading shares on the appointment of financial adviser, to the Prime Minister, from Sindh has added new dimensions to stock trading.
The post-Eid holiday rally reflects the presence of strong pent-up demand as well as some fresh buying in the pivotals on the perception that the adviser may give a new look to his economic and financial team.
There are no fresh stimulating news either on political or economic fronts but the investors seem to be working on their own whims about the state of the economy, the political stability and a spate of good news after the Prime Minister settles down, one broker said.
The PM’s announcement of a cut in power rates by 12 paisa per unit, promise to reduce gas prices, give a push to industrial sector, and boost exports was welcomed. A pick in industrial activity would give strength to the current buying euphoria.
The other positive factor appears to be the perception that the recent 1.5 per cent cut in discount rate to 7.5 per cent will make the dividend yielding stocks, such as the PTCL and the Hub-Power, more attractive for future investment.
“Speculative forces appear to be in a mood to test the index level of 2,500 points in near-term, but what’s next, nobody wants to predict”, said an analyst.
Stock analysts did not rule out the possibility of selective foreign buying on some counters as some institutional traders literally operate under its shadow.
Whatever reasons are behind the current sustained run-up, one thing appears certain that the investors are in no mood to lay their guards for near-term. Capital gains may not be the sole reason behind this flurry.
Leading gainers were led by the Nestle MilkPak, the Siemens and Unilever Pakistan, followed by the ICP SEMF, the Adamjee Insurance, the Kohinoor Weaving, the Artistic Denim, the Pakistan Oilfields, the Pakistan Refinery, the Shell Pakistan, the Bolan Casting, the Pak-Suzuki Motors, the Clariant Pakistan and the PSO. Some of them ended with clipped gains on late selling.
Losers were led by the Treet Corporation and the Pakistan Reinsurance Co, the Sarhad Cigarette, the Grays of Cambridge, the HinoPak Motors, the Wyeth Pakistan, the Abbott Lab. Auto shares also fell, followed first by official hints but later denied that the imports of reconditioned cars may be allowed to improve local supply position.
The Pak-Suzuki Motors, the Indus Motors, and some others fell from their recent peak levels. Traded volume rose to a record 1.5 billion shares as both the volume leaders — the Hub-Power and the PTCL — were massively traded almost in each session amid alternate bouts of buying and selling. But the PSO, another volume leader remained under pressure and fell sharply followed by conflicting reports of pre-bid meeting.
These were followed by the Sui Northern Gas, the FFC-Jordan, the Fauji Fertiliser, which showed smart gain on the reports of higher sales, the Engro Chemical and the National Bank. The Telecard also joined the list of actives, and so did the KESC, the Nishat Mills, the ICI Pakistan, the Adamjee Insurance, the D.G.Khan Cement and several others.—Muhammad Aslam