Stocks last week showed fresh widespread gains as reports of higher corporate earnings continued to inspire fresh speculative buying both by bargain-hunters and speculative traders, although mid-week profit-selling did limit the market’s sustained run-up to establish new records.
The KSE 100-share index eying its next chart point of 3,000 was further boosted by the bulls but beyond 2,950, leading base shares attracted a lot of profit-selling, reflecting the tussle between the bears and the bulls to keep its value in their respective favour.
However, the broad-based buying support indicates that the market is poised to set new records both in terms market capitalization and index level. The end of Iraq war and encouraging reports of higher corporate earnings may not allow financial investors to sit on the sidelines in the coming sessions and their presence could give the needed boost to the share values as well as the index.
Only fools could miss an attractive bait of quick capital gains followed by predictions of an imminent buying euphoria well-manifested in the performance of the broader market, analysts said.
Massive surplus money floating here and there in the backdrop of falling yield rates on the T-bills, had already found its way into the share business.
Steep rise in the market capitalization at Rs641 billion has broken its all-time previous record of Rs610 billion and indications are that it could maintain its upward thrust until the index set a new record beyond the 3,000 point level.
“I think bulls are out to push the KSE index above the 3,000 point level but in phases and what after the breach of the barrier is not clear as the heating up of the local political scenario because of row on the LFO has raised many questions about the stability of the system,” analysts said.
Apart from perceptions of higher interim profits by some of the leading companies whose board meetings are due next week, the fresh cut of 7 to 12 per cent in petroleum prices for the second consecutive fortnight was another supporting factor as investors think it could lower the industrial production costs and will make export more competitive. However, as feared by some brokers, the share values of both the PSO and the Shell Pakistan did not react bearishly but rather posted smart gains dispelling fears of fall in earnings as lower prices could well mean larger sales.
The KSE index finally stood firm above the barrier of 2,900 points at 2,935.39, indicating its onward march to the coveted next chart point of 3,000. The net rise over the week was 64.68 points. The market capitalization soared to Rs641 billion, bettering its previous all-time peak level of Rs610 billion.
The Tuesday’s downward revision of POL prices could work as a double edged weapon on the stock market, analysts said, adding on the one hand it could have an adverse impact on the profits of oil marketing companies and cut industrial production costs on the other.
The total decline in POL prices over the last month comes to about 20 per cent, which in turn could have a significant negative impact on the earnings of oil marketing giants, notably the PSO and the Shell Pakistan.
But some others claim the downward adjustment in POL prices effected in line with the falling world rates has just clipped in part the successive increase witnessed over the last quarter and may not have any significant impact on the profits of oil marketing companies.
“The broad-based buying reflects that investors have welcomed it and ventured to go for other stocks having potential to rise and did not confine themselves to a dozen selected shares,” says a leading analyst, adding “it signals a major change in the new portfolio building by the investors.”
Meanwhile, tussle for the PSO share is on as the postponement of its sell-off bidding date has provided the badly needed leverage to the bears tilt the price balance in their favour and they succeeded in part during the post-delay sessions.
“Bulls, including some big ones, having an enormous financial backup facilities were not that easy to be outwitted,” analysts said. “They fought back and absorbed bulk of selling and judiciously maintained the price at a sustainable level.”
With war in Iraq almost over and board meetings of some of the leading companies due next week, analysts predict the continuation of the current bull-run, stray selling here and there notwithstanding.
Leading gainers were led by the Packages, the Unilever Pakistan, the IGI Insurance, the Pakistan Reinsurance Company and the Arif Habib Securities, up Rs6.50 to Rs18.10. Other good gainers included the Sapphire Textiles, the Mari Gas, the Pakistan Oilfields, the Pakistan Refinery, the Treet Corporation, the Gillette Pakistan, the National Foods, the Nestle MilkPak, the Bata Pakistan, the HinoPak Motors, the Dawood Hercules, the Abbott Lab, the Security Papers and the Packages. Some them attracted selling and ended with clipped gains.
Prominent losers included the Wyeth Pakistan, the Al-Ghazi Tractors, the Treet Corporation Refinery, the Gatron Industries after last week’s sustained run-up above Rs100, the Noon Sugar, the Bhanero Textiles, the Faisal Spinning and some others.
Traded volume was maintained well above the 1 billion share market, thanks to active bout of buying and selling in the volume leaders, notably the Hub-Power, the PTCL and the Sui Northern Gas.
Other actives were led by the D.G. Khan Cement, the Bosicor Pakistan, the PIAC(A), the KESC, the Pak PTA, the PSO, the ICI Pakistan, the Nishat Mills, the FFC-Jordan Fertilizer, the Engro Chemical, the Pakistan Oilfields, the ICP SEMF, the KESC, the National Bank, the Telecard and several others.
FORWARD COUNTER: The Hub-Power, the PSO and the ICI Pakistan on-balance ended lower, while the PTCL, the Sui Northern Gas and some other managed to finish modestly higher, the highlight of the week being active alternate bouts of buying and selling in the leading shares.—Muhammad Aslam