THE Karachi Stock Exchange 100-share index last week briefly broke the psychological barrier of 14,000 points on active short-covering on the blue chips counters but the weekend profit-selling pushed it fractionally down from the coveted level.
The Rubicon was finally crossed through creeping rallies as investors were not inclined to go all out for the kill. They proceeded after consolidating initial gains.
The chief inhibiting factor behind the relative go-slow appears to be the Opposition’s decision to boycott the general elections despite President Musharraf’s announcement that emergency would be lifted on Dec 16. The lifting of emergency will meet most of the demands of the Opposition. How would they react to the President’s announcement would be known by the next week.
The change of command in the armed forces after doffing uniform by President Musharraf and taking oath for the second presidential term were, however, welcomed by the stock market on the perception that it would eventually lead to a civilian rule.
For the second week in a row, the KSE 100-share index maintained its upward drive and was quoted further high by 266.33 points at 13,998.52 as compared to 13,732.19 points a week earlier.
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The index maintained upward trend to the pre-reaction level of well over 14,000 points after having consolidated earlier gains. But there was no massive single session rise associated with a bull run. However, the creeping rallies were sustained.
The threat of the Opposition to boycott the general elections if their demands were not met, did not allow strong speculative buying on any of the counters as investors played safe. The creeping rally was, however, well sustained with modest gains in the index and leading shares.
The transition from the eight-year army rule towards a full democracy was a bit smooth, but the major demands of the Opposition, including return to the pre-Nov 3 position, were yet to be met by the president.
Although local financial institutions were back in the market after the change of command and president’s oath-taking, and covered positions on selected counter, general investor was still in two minds and watched the situation from outside.
Absence of foreign investors was also felt. Reports that some of them had pulled out their investments from the local bourse, after liquidating in part their long positions on some of the counters, also took its toll.
But the mid-week reports of a possible increase in petroleum prices to match the current flare-up on the world market and a hike of over Rs8 per bag in cement prices evoked a good bit of buying interest in both the sectors followed by active short-covering.
Stocks on Monday resumed trading on a higher note but the buying support lacked aggressiveness associated with a bull market as investors were not inclined to put all the eggs in one basket for obvious reasons.
Barring oil shares, which ran into profit-selling at the higher levels early but recovered later, other leading shares sustained the run-up in the index.
While on the other hand MCB, Pakistan Petroleum, Pakistan Oilfields, PSO, and Arif Habib Securities came in for active mid-week short-covering and finished sharply higher.
“Investors are not inclined to take long positions on any of the counters owing to heating up of the political scenario after the arrival of Sharifs from Saudi Arabia, said a leading analyst Hasnain Asghar Ali.
“Alternate bouts of buying and selling appear to be the hallmark of the entire activity”, he said.
The market maintained its creeping rally for the second week in a row but it appears to be too weak to suggest that it could well be a prelude to a major breakthrough, he added.
“Political uncertainty is still there amid talks of boycott of elections if the emergency was not lifted”, analyst Ahsan Mehanti said adding “investors are expected to follow the political developments before taking fresh bigger positions”.
But some others said a section of investors is awaiting the post-uniform doffing scenario and keeping to the sidelines in an effort not take undue risks.
Forward counter: Leading shares on the cleared list managed to finish with fresh gains after initial pruning and finished higher under the lead of MCB, National Bank, Pakistan Oilfields, Pakistan Petroleum, Lucky Cement, D. G. Khan Cement and some others amid active two-way trading. —Muhammad Aslam
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