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| April 16, 2007 | Monday | Rabi-ul-Awwal 27, 1428 |
Steep rise in stocks on Chartered Bank listing
THE share market finished the last week on an extreme bullish note as foreign-led buying support did not take even a technical breather long overdue in an overbought market owing to an attractive bait of capital gains.
The significant feature of the week was that many previous records were broken and new set, the most notable among them being steep increase in the market capital of Rs319 billion at an all-time high record of Rs3,495 billion and Rs243 billion in a single session at the fag end of the last week. Both are all-time record so far.
The listing of Standard Chartered bank, which made its debut at the face value of Rs10 and finished at Rs57.65 after hitting the session's high at Rs65.50 was said to be the chief contributor to both the daily and weekly market capital.
Analysts said the total market capital of about $60 billion now provides the needed depth to the foreign funds and their strong presence on selected counters reflects they are already in targeting bank, cement and leading oil shares.
The KSE 100-share index last week steadily inched up to retain its lost glory above the level of 12,000 points and positive indicators show that the goal is now not that elusive based on strong basic fundamentals.
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Over the week it has already breached three consecutive barriers and was close to hit the target in mid-week trading, steady inflow of leverage holdings in the form of selling halted its run-up.
The other negative factor, which in a way checked its upward move, was reports that the SRCP would present its finding on the market crash of March 2005 to the Standing Committee of the National Assembly on the issue on April 14.
However, investors, notably foreign funds, were not deterred by the expected negative fallout of the resumption of hearing on the presidential reference against the Supreme Court chief justice by the Supreme Judicial Council on April 13 despite the fact that lawyers vowed to continue their protest against it.
The big question being debated by the analysts is “what is beyond the index level of 12,000 points”. Whether or not it will continue its upward thrust on the strength of higher corporate earnings, or fell victim to political uncertainty”.
“There could be no precise answer to this question,” analyst Ahsan Mehanti said adding “it will largely depend on the holding capacity of the foreign funds and if resort to selling there could be a massive retreat”.
However, for the time being investors both local and foreign are relying on the positive corporate fundamentals and are not inclined to bow down the current battle of wits between the contenders of power.
The KSE 100-share index crossed three psychological barriers on active foreign and institutional support in the oil shares aided by the new exploration policy, which removed price cap but failed to sustain it on late selling.
According to the new draft policy, the wellhead prices of crude and gas have been raised from $36 to $45 per barrel and $22 to $30 to $36 MMBTU respectively.
The perception that the move could give a major boost to oil shares in the coming weeks triggered active short-covering in most of them at the still lower levels and sympathetic support on the other blue chip counters.
Stocks, therefore, resumed their winning streak aided by buying in the leading oil shares on reports that leading among them will significantly benefit from the new oil exploration policy.
The index appears to be heading to hit its previous all-time peak level of above 12,000 points if all goes well with the market thinking about the future share market outlook as is evident by heavy stakes being taken in the banking, cement and oil shares by all and sundry, most floor brokers believe.
Pakistan Petroleum led the market advance on heavy foreign local buying on the perception that it could be one of the chief beneficiary of the new oil exploration policy, while OGDC, Pakistan Oilfields followed them creating a buying euphoria on the other counters.
Leading cement shares on the other hand came in for active profit-selling at the higher levels and finished modestly lower under the lead of Lucky Cement.
“Investors seem to have decided to go alone apparently ignoring the current tussle between the contenders of power leading to political uncertainty”, analysts said. “But as the corporate fundamentals are extremely bullish investors are not inclined to miss the rising bandwagon”, they added.
FORWARD COUNTER: Speculative issues also followed the lead of their counterparts in the ready section and finished further higher under the lead of Lucky Cement, D. G. Khan Cement, Bank of Punjab, OGDC, Pakistan Petroleum, National Bank, Bank Al-Habib and Askari Bank. Some second-liners also followed them.—Muhammad Aslam
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