KARACHI, Jan 27: The KSE 100-share index on Monday recovered 137 points or five percent followed by heavy institutional buying in an oversold market after the amicable settlement of outstanding carryover business and a sharp cut in the badla rates to 11 per cent from previous highs of 50 per cent.

The return of a bull regime is also well-reflected in a massive rise of Rs29bn in the market capitalization, which soared to Rs604bn from the last week’s low of Rs575bn, reflecting the investor future perceptions about the share business.

Low-priced energy shares, notably Shell Pakistan after the announcement of a higher interim dividend of 95 per cent and blue chips on the other counters were some of the other aiding factors and some of them finished above their circuit breakers in both the ready and forward counters.

Although still lower by 100 points below its best level of 2,955.00 points established two weeks back, it breached through its psychological barrier of 2,700 points at 2,746.85 or 5.27 per cent just in one go.

Analysts predict the next couple of sessions could witness it well above its recently set up target of 3,000 plus points.

Amicable settlement of the massive carryover business of about Rs15 billion and the consequent fall in badla rates (carryover charges), to an average normal range of 11 to 12 per cent on Friday from the previous 50 per cent has given the needed push to the bulls to strike back, they said.

As the fears of default by some of the brokers who had allegedly played beyond their exposure limits two weeks ago were allayed after the clearing of carryover business, bulls re-entered the market with a bang to cover their short positions at the lower levels.

“There was an avalanche of buystops but no matching selling from any quarter,” they said. “The institutional led rally was so strong that bears withdrew to the sidelines to sell at the further higher levels.”

The last week’s persistent selling, which had pushed the KSE 100-share index by 345 points down had made the ruling prices of blue chips fairly attractive and bulls could hardly miss the charm of capital gains.

All the shares, notably Engro Chemical and Fauji Fertilizer whose board meetings are due this week and low-priced energy share came in for strong short-covering at the lower levels and led the market to a sustainable recovery.

“Bears may not be licking their wounds witnessing their sudden rout from the sidelines, there was a scare among them all-around,” brokers said adding “some of them even indulged in hasty selling joining the select band of leading bulls.”

“Some worries about the Iraq situation are there,” says a leading analyst “but I don’t think it could pose an immediate threat to the grand return of a bull market.”

An impressive interim dividend at the rate of 95 per cent by Shell Pakistan, not only pushed its share value higher by Rs24.85 at Rs403 (face

value Rs10), but also triggered heavy covering purchases in other leading energy shares, notably PSO, which recovered Rs14.80.

Apart from PSO and Shell Pakistan, top gainers were led by Pakistan Refinery, Pakistan Oilfields and Unilever Pakistan, up by Rs7 to Rs69. They were followed by 4th ICP, Javed Omer, Mari gas, Al-Ghazi Tractors, Indus and Pak-Suzuki Motors, Abbott Lab, Engro Chemical, Fauji Fertilizer, ICI Pakistan, Glaxo-Wellcome, BOC Pakistan and Cherat Papers, up Rs3.05 to Rs6.05.

Losers were led by Sapphire Textiles, Lawrencepur Woollen and Mitchell’s Fruits, Kohinoor Weaving, Faisal Spinning and EFU Life, off Re1 to Rs2.50.

Trading rose to 363m shares from the previous 302m shares as the advancing shares forced a strong lead over the losing ones at 271 to 39 with 27 shares holding on to the last levels, out 338 actives.

Hub-Power came in for strong buying after the announcement of the board meeting, up Rs1.45 at Rs37.80 on 117m shares followed by PTCL, higher by 95 paisa at Rs24.35 on 47m shares, PSO, up Rs14.80 at Rs212.25 on 31m shares, Sui Northern

Gas, higher by Rs1.50 at Rs24.10 on 26m shares and FFC-Jordan Fertilizer, up also by Rs1.50 at Rs12.15 followed by reports that it will soon resume production of DAP fertilizer suspended a year back owing to higher raw materials. It traded 23m shares.

FORWARD COUNTER: Most of the leading shares breached through circuit breakers owing to massive short-covering. PSO, Engro Chemical, ICI Pakistan, MCB and Fauji Fertilizer were leading among them, up by Rs2.40 to Rs6.56, the largest rise of Rs.14.85 being in both the settlements of PSO at Rs212.85.

Others were also traded on the higher side in both the settlements including February trading, which commenced from Monday (Jan 27).

DEFAULTER COMPANIES: Trading in this sector was also active where shares of a dozen companies came in for trading. Dominion Stocks again led

the list, up 10 paisa at Rs2.50

on 25,500 shares followed by Schon Modaraba, higher 20 paisa at Rs0.90 on 14,500 shares and Suzuki Motor Cycles, up 70 paisa at Rs7.50 on 10,000 shares.

DIVIDEND: Shell Pakistan interim 95 per cent, Gulistan Textiles cash 7.5 per cent.