Investors resumed the new year’s trading with an expectation to see the index touch 3,000-point level. None among them was inclined to take even a technical breather and tried to build-up a strong edifice on the legacy bequeathed to them by the outgoing record year.

New records both in terms of single-session volume figure at 689 million shares and the index level of well over 2,750 points were established surpassing the decade-old bullish conditions. The positive background news both on political and economic fronts indicate best is still to come.

The market capitalization, over the first week of the new year, rose by Rs15.305 billion, crossing the Rs600 billion figure after a decade at Rs603.114 billion, the highest so far being Rs610, hit in mid-90’s boom conditions.

Stocks, therefore, opened the new year account on bullish note boosted by fresh stimulating news and the talk of the presence of foreign support on selected counters, allowing the KSE 100-share index to consolidate above the newly established chart of 2,700 points.

The net rise over the week was 83.44 points or about four per cent at 2,744.82 as compared to 2,661.38 points, indicating a successful breach of the 2,700-point barrier after some abortive bid earlier in the week.

The new year could bring more benefits for the investing public as fresh funds may flood the market after across-the-board two per cent cut in profit rates on all national saving schemes including, the Defence and special saving schemes.

“All roads may not have led to the share market during the last year, but the new year could witnessed an unprecedented buying euphoria on the strength of major changes in some of the basic fundamentals”, analysts predict.

Some others say it is too early to predict about the market behaviour during the current year as anything negative could happen in between. Being highly sensitive to external negative developments it may not sustain the record established during the outgoing year.

Backed by half a dozen positive news both on political and economic fronts, including a vote of confidence for the prime minister, investors are buoyed by the predictions of a higher dividend from the energy and the fertiliser sectors.

The KSE 100-share index finally settled above the 2,700-point level from the previous week’s 2,661.38 points, after having broken the barrier of 2,700 points by more than one time. The total market capitalization was close to Rs600 billion mark.

However, no one could dispute the fact that the year 2,002 will go into the history of the Karachi Stock Exchange as a boom year reminiscent of buoyant conditions of the mid-90s, although analysts predict the new year could be more productive for the investors ensuring a fair return on their investment.

“The two per cent cut in the discount rate by the central bank followed by an identical reduction in profit rates on the national saving schemes appears to be the chief stimulating factor behind the prevailing boom conditions”, they said adding “the money will go where it is safe and could appreciate and sound stocks ensure higher return as compared to any other mode of investment at least for the near-term”.

An old adage now seems to be working in reverse gear. “Too many rupees are now chasing too many stocks in a highly overbought market”, one broker said adding “previously too many rupees chased too few stocks causing an unprecedented price flare-up”.

Both the financial institutions and the bankers have realized after the rate cut that the bait of capital gains is now more attractive than any other mode of investment and return on it. They flooded the share market with the “buystops”, sending signals among the retailers and the genuine investors to follow them.

Perceptions of a political stability, signs of the economic recovery and predictions about the possible riding on the bandwagon by some leading foreign funds were said to be contributory factors supporting the current boom.

“Considered as a barometer of the national economy whether or not the current boom conditions on bourses will be fully be reflected in the economic recovery will be seen with interest by the financial analysts”, brokers said.

Higher dividend announcements even by the ailing textile sector and some positive developments on the privtization front of some mega state-owned units including, the PTCL and the PSO also played their role allowing the market to consolidate after each rise.

“The rate of return in shares in the form of dividend on an average is calculated between 15 and 20 per cent, much higher than return on any other mode of investment”, analysts said “despite risks associated with the share business, investors are not that fool to stay away as the financial risk is worth-taking”.

The historic year that has just passed into history has witnessed many decade-old records surpassed and some new established both in terms of single-session trading volume, and the KSE 100-share index’s meteoric rise beyond the level of 2,700 points.

“Investors are now eyeing the index level of 3,000 points sans fears of the US attack on Iraq”, one broker predicts “massive cash amounts have virtually flooded the stock market as the bait of capital gains appears to be the hallmark of the entire trading”.

The Index started the year around 1,225 points and steadily maintained its sustained upward drive to hit the all-time peak level of 2,700 adding about Rs200 billion to the total market capitalization at Rs594 billion, the net rise being over 112 per cent.

Trading volume soared to 2.509 billion shares including a single-session record figure of 689 million shares and 329 million shares in Hub-Power on Dec 31,2002.

Bulk of the support remained confined to the Hub-Power, the PTCL, the PSO, the PTCL, the Sui Northern Gas, the ICI Pakistan, the National Bank, the D.G.Khan Cement, the FFC-Jordan Fertiliser, the Engro Chemical, the Fauji Fertiliser and many others. The interesting feature was that most of the deals were done at the rising prices.

FORWARD COUNTER: Speculative shares on the forward counter also followed the trend in the ready section and ended with smart gains under the lead of the PSO, the Engro Chemical, the Fauji Fertiliser, the Hub-Power. Even the Pak PTA and the FFC-Jordan showed smart rallies amid heavy daily volumes.—Muhammad Aslam