The KSE 100-share index breached through the psychological barrier of 2,900 points but failed to reach its next targeted figure of 3,000 points, as bears slowed down the sustained rise after indulging in heavy-selling in most of the pivotals.
But there were no indications that the run-up was overdone as the leading bulls consolidated their positions to resume the upward march beyond 3,000-point index level. The weekend selling and fears about the negative impact of higher carryover business and rates also worked against the sentiment.
Speculative issues on forward counter also followed the lead of their counterparts in ready section, and on-balance managed to finish higher with the exception of the Hub-Power, which fell modestly on heavy profit-selling.
Shares on ready counter, however, broke all previous records as investors were not inclined to miss the rising market and an attractive bait of handsome capital gains followed predictions that the sky now may be the limit to current run-up. While the KSE 100-share index is poised to test its next crucial level of 3,000 points, being considered its take-off point for onward journey, the market capitalization has already touched an all-time peak level of Rs647 billion and has lured foreign investors in a big way.
Price flare-up, barring some investment shares is unprecedented, making droves of investors ‘overnight millionaires’ but their appetite for most stocks is still not satisfied.
The buying interest is spreading like wild fire from the energy sector to hereto neglected issues on the auto and food sectors, followed by the low-priced shares having potential to appreciate on other counters. Many leading stock analysts still doubt the market’s ability to sustain the current run-up, but the Rubican has been crossed boosted by the predictions of higher corporate earnings, steady inflow of foreign buying and strong presence of institutional traders. It appears to be a bit difficult now to pull it down for technical corrections here and there, notwithstanding in a “best performing market”.
The KSE 100-share index on Wednesday soared by 3.52 per cent, or 100 points and settled firmly above the barrier of 2,950 points, followed by massive short-covering in pivotals triggered by the rumours of some more tax exemptions for those foreign investors who invest in local shares. It finally ended around 2,954.63 points.
Both, the breach — through the psychological barrier of 2,900 points, — and the massive increase of about Rs20 billion in market capitalization at a record high of Rs645 billion is considered an attractive bait for any foreign investor, notably in shares such as the PTCL, the Hub-Power and the Sui Northern Gas at their current levels.
“More tax incentives may not open the flood-gate for foreign funds as they link their entry to any market having a depth of over $20 billion (the KSE current market capitalization being slightly above $11bn”), but will certainly add to investor-confidence”, hopes a leading stock analyst.
An idea of price flare-up may well be had from the fact that there was a virtual scramble on all blue chips’ counters where individual shares, notably in the energy sector are racing toward their new career-best levels.
“The next target of 3,000 points is now just one shot away”, one broker said, “analysts are now talking of the index level of 3,200 points and for good reasons too”.
After last two days’ interruption, all roads again led to the stock market as no one was in a mood to miss the rising market and an attractive bait of capital gains.
The reports that the government is considering tax exemption for foreign investors in local shares and free repatriation of profits, again lured investors back in the market who were thinking of fresh pruning after indulging in heavy selling.
“But the perception that the strong presence of foreign funds, in the already bullish market, could give it the needed depth generated a lot of local short-covering by the punters and the genuine investors”, analysts said.
All leading shares, notably in energy sector remained the bone of contention throughout the session and finished with smart gains under the lead of Shell Pakistan, which soared by Rs18 at Rs461 (the face value being Rs10).
“Huge amounts of money originating from the overseas Pakistanis, and the local banks is flooding the share business and no one could precisely predict at this stage where the end would come”, brokers said.
Opinions are, however, still divided over the persistent bull run as some say it is not backed by objective economic conditions and appears to be “inspired”. But some others claim, it is genuine and reflects the strong presence of financial money, which is not finding profitable outlets in the corporate sector. Plus signs dominated the list under the lead of Attock Refinery, Pakistan Refinery, Dawood Hercules and Unilever Pakistan, National Refinery, Shell Pakistan, followed by Adamjee Insurance, New Jubilee Insurance, Fazal Textiles, National Refinery, Pakistan Oilfields, Siemens, the PSO, General Tyre, Packages, Suzuki Motors, Indus Motors, Atlas Honda cars, Unilever Pakistan, and several others.
Losers were led by the Sapphire Fibre, the Abbott Lab, the Nestle MilkPak, the Millat Tractors and the Pakistan Reinsurance Co and many others, but most of them reacted modestly.
Trading volume rose to 2.344 billion shares from the previous 2 billion shares, bulk of which was shared by the Hub-Power, the PTCL, the Sui Northern Gas and the PSO. Other actives were led by the Dewan Salman, the KESC, the Pakistan Oilfields, the FFC-Jordan Fertiliser, the Fauji Fertiliser and the Engro Chemicals.
Other actives included the ICI Pakistan, the D.G.Khan Cement, the National Bank, the Japan Power, the MCB and many others.—Muhammad Aslam