THE share market maintained its recovery tempo for the second week in a row as investors continued to build-up long positions on selected counters aided by higher capital gains and dividend yields as well as absence of foreign selling.

The KSE 100-share index added fresh gain to previous week’s robust rally, up 220.02 points or about five per cent at 5,997.44 points as compared to previous week’s 5,377.42 points, adding Rs65 billion to the market capital. Other indexes also rose sharply under the lead of KSE 30-share index, which rose by 438.97 points at 5,634.78.

The sustained run-up for the second week in a row was widely welcomed by investors but a section of leading brokers remained in doubt about the market’s ability to maintain a steady posture in futures too owing to tensions on political and Indian fronts.

“The current rally is essentially based on higher corporate results and capital gains,” analyst Hasnain Asghar Ali said adding “whether it could be sustained in the coming sessions is anybody’s guess”.

The big question being debated among leading analysts is “whether or not the fund and institutional buying could be sustained in the coming weeks also”, analyst Ahsan Mehanti said fearing that “profit-selling by them at the inflated levels could reverse the trend”.

He said the news that official sources had allowed the revaluation of investment in equities for the last two years, could well prove a sustaining factor for the current rally on the perception that both the inventory and the revaluation gains could add to the current strength of the market.

But the deciding factor would be whether or not investors stayed in the market after having netted capital gains and dividend yields during the post-dividend scenario, some others said.

Trading on Monday, however, resumed on a hesitant note as follow-up support turned shy but analysts said the market was passing through a consolidation phase after last week’s nine per cent increase and was in search of a direction.

“There could be two opinions about the impact of new monetary policy on trade and industry, but as far as the capital market is concerned it could well prove a stability factor in more than one ways”, said a leading analyst Ahsan Mehanti. The status quo in discount rate at 15 per cent was widely speculated by brokers and investors that eventually could lead to cut in lending rates during the next quarter as monetary policy now would be reviewed on quarterly basis, he added.

Another analyst Ashraf Zakaria said investors now would have a fair idea of the borrowing costs at least for the next quarter and go for stocks if they still ensure higher capital gains as the market was expected to behave properly during the coming sessions. The selling which, however, covered the entire market, notably the overvalued shares, never assumed an alarming proportions and was well absorbed mainly at declines.

Floor brokers said fresh covering purchases in leading banking shares, notably MCB and National Bank proved a stabilising factor and allowed the broader market to minimise the earlier losses.

However, most analysts predict that despite political polarisation and tensions with India and operation in FATA, the market is expected to keep its recovery tempo in coming sessions also as investors were not inclined to miss the current attractive bait of capital gains.

It was essentially the weakness of oil and food sectors followed by renewed selling in some leading MNC’s, which worked against the underlying sentiment, they added.

Despite relative weakness of the benchmark, the KSE-30 shares index managed to finish with an extended gain of 3.1 points at 5,198.91, while both the KSE ALL Shares and KMI-30 Shares indexes fell by 29.69 and 95.52 points at 3,987.15 and 7,087.30 respectively.

Forward counter: Some leading shares, in the banking, oil and fertiliser sectors showed smart rallies despite profit-taking at inflated levels but physical business remained light. The notable feature of the week was the smart recovery staged by OGDC, which also accounted for 20,000 shares at Rs49.58.

Barring a modest turnover of 10,000 shares in some of the actives, price flare-up on other counters did not match turnover figure.—Muhammad Aslam