THE share market last week showed signs of strong rally as NIT fund-led covering operations continued to inspire the institutional traders and other investors to go for fresh buying as positive news from political and corporate fronts followed in quick succession throughout the week.

The market’s decisive trend on the upside was well reflected in the performance of KSE 100-share index, which briefly breached through the barrier of 6,000 points, but late weekend selling pushed it down.

The closing, however, was on higher side at 5,969.09, up 343.19 points, adding Rs94 billion to the market capital at Rs1,860 billion. The KSE 30-share index also posted a rise of 506.6 points at 6,132.5.

After having hit its four-year low at 4,782.26 on Jan 27,2009, the current recovery of 1,240 points since then, of course, after technical corrections here and there, gives hope it could be sustained during the next couple of months before the national budget, some others said.

However, opinions are divided over the future direction of the market. Some say the current recovery tempo would be sustained during the coming sessions on the strength of positive news, notably from the corporate sectors. While others believe the market is still fragile and any negative news could pull it down.

Apart from perceptions of peace in the tribal region, notably Swat and Malakand after the signing of a deal between the NWFP government and religious leaders seeking enforcement of Sharia, higher corporate announcement by leading companies did not allow investors to cash in on the available margins of profit.

Easing of the prolonged tension with India after having shared the findings of the local probe on the Mumbai attacks also buoyed most investors as the fears of war faded, some brokers said.

A positive signal from the recently held Dubai moot hinting at restoration of KSE MSCI index membership suspended a couple of months back, also influenced the underlying sentiment on the higher side.

The opening was the extension of the weekend rally as investors covered positions boosted by higher cash and bonus shares announced by the MCB management and Attock Cement amid a judicious blend of both genuine and speculative buying at the current lower levels.

The fresh recovery staged by the KSE 100-share index for the consecutive fourth week reflects that it could be sustained on the strength of some positive developments and market talk of some higher payouts announcements.

Already back on the rails after the SECP relaxation on new accounting standards, an accord on the enforcement of Sharia in Malakand and Swat and ceasefire by the Taliban further intensified the covering operation, analyst Ahsan Mehanti said.

Essentially, it appears to be corporate sector-led rally on the strength of higher payouts, which he called, the extension of weekend run-up on the perception that peace in FATA after the current deal, could have a positive impact on the share business in the coming sessions.

There was a galore of circuit breakers on blue chip counters, the notable feature was that instances of investment buying dominated the trading reflecting that the current rally could extend itself farther at the current lower levels.

But another leading analyst Hasnain Asghar Ali thinks that “the current boost appears to have reinforced investor perceptions about the upcoming higher working results by some of the leading banking and cement companies, which kept them as active buyers at the current levels”.

“A final cash dividend of 25 per cent plus 10 per cent bonus shares by MCB, 55 per cent cash and 20 per cent bonus shares by Habib Bank and an interim of 200 per cent by Millat Tractors, interim cash payout of 17.5 per cent by the Attock Cement and final cash of 40 per cent by ICI Pakistan seem to have restored investors’ confidence in the share business”, he said.

But what seemed to have allowed the market to maintain a steady posture despite mid-week profit-selling were reports of a higher interim cash payout of 50 per cent by the Pakistan State Oil despite a loss.

“The future direction of the market will largely depend on how the current peace agreement in Swat and Malakand areas holds”, analyst Tabsih H. Rajabali said adding “but the strong covering purchases by both the NIT-managed fund and some leading institutional traders reflects that equities have more than one reasons to positive developments both on the corporate and political fronts”.

Forward counter: steady conditions were also witnessed on the cleared list where some blue chips, notably Pakistan Oilfield, Pakistan Petrol, MCB, Engro Chemical and some others came in for active support both at the rise and the fall and accounted for large volume after several lean months.—Muhammad Aslam