Karachi Stock Exchange index scores century in a session

KARACHI (January 16 2003) : The KSE-100 index scored a century in a single session on Wednesday, after almost six months, reaching the record high of 2,950 points as foreign buying in Sui Northern Gas, Nishat Mills and other companies spurted on expectations that their payouts would be handsome.

The KSE-100 index denoted an increment of 100.22 points, or 3.52 percent, to 2,950.29 from 2,850.07.

The volume amounted to 591.147 million shares, against 389.114 million shares of Tuesday.

Market capitalisation soared to Rs 645.282 billion from Rs 624.913 billion.

The index recorded a rise of 100 points after almost six months because on June 10, 2002, the market had registered an increase of 100.43 points.

One significant information provided by a local brokerage house about 100 points rise in the last five years showed that after every increase, out of seven times on six occasion, the index on the following session received heavy battering.

The market opened on a casual note but after one hour of trading investors entered the arena with a bang and the index easily broke the 2,900 points level.

A leading trader said that the market received fresh buying orders from some of the participants linked with the foreign fund houses.

Their interest was well evident in Sui Northern Gas, Nishat Mills, Dewan Salman, National Bank of Pakistan and Hub Power Co.

Most of the buying registered was on hopes that these entities would pay good dividends.

Several companies by next month would announce their financial results for the year ended Dec 31, 2002, and for six months.

The prospects of good dividend are on the cards and the range would be 20 to 50 percent.

National Bank of Pakistan, Muslim Commercial Bank, Engro and Fauji would announce their results for the year ended December 31, 2002, while Hubco, PTCL, Shell, Sui Northern Gas and PSO would announce their results for six months.

The rallies in these scrips have built a buying euphoria and attracted range of investors including financial institutions, banks and DFIs to put their money in the local stock market.

Now the 3,000 points is imminent and might be touched in the remaining two sessions of the current week, or probably on Thursday.

But the past experience says that the index, after scoring a century, depicts a slide, which might put some of the investors on tenterhooks.

“Wednesday's rise was characterised by an across-the-board increase in share prices with heavy volumes. Now the question arises: is this rise sustainable? We are of the opinion that the market is likely to take a breather after 100 points' rise,” said Zaheeruddin Khalid, head of research at First Capital Securities.

For the past two months, Karachi stock market has been rising, with very small corrections.

Consequently, at least a 50-60 point correction should be coming now.

COT session saw a bit of panic towards the end as there was an apparent shortage of funds.

This might give the market the much needed correction.

“However, given the overall liquidity position of the banking system and the upcoming result season, we do not expect this correction to last for long.

We are of the opinion that the market would continue its overall upward trend on account of the positive results expected in the coming weeks,” Zaheer said.

Raheel Moosani of Moosani Securities said that bulls snapped a two-day losing streak to close about four percent higher as investors focused on a technical rebound.

Optimism generated in the energy, telecom, banking and fertiliser sectors.

Institutions and punters were whacked by two straight correction phases as the yield enticement motivated speculative interest in the blue chips and side board stocks and the couple of days' technical correction became sufferer of massive buying as market struggled out of the doldrums and gained 100 points.

Investors were anxious to put money after hanging on to cash during the recent bearish spell, hoping that the market would climb higher and finger the coveted 3,000 levels soon.

Blue chip stocks in particular coupled with sideboard stocks raced higher, bolstering the market activity mainly on short-covering in select stocks.

Activities in Nishat, Sui Northern Gas and Dewan Salman capped once the pivotals stuck to their upper circuit breaker limit in both regular and forward counters.

Market momentum was positive, as advancing issues outnumbered declines 261 to 84 as day's range remained between 2,857.35 and 2950.32.

The market rally boded well for the brighter days as index would in a day's time cross the 3,000 coveted levels.

Hasnain Asghar of Aziz Fidahusein said that the market was back on track as the tempting levels of performing stocks invited fresh funds, thus giving the punters a line to follow.

Across-the-board buying allowed the index to test and breach major resistance of 2,890-2896.

The market, as expected, consolidated above 2890 to close above 2900.

The ongoing buying and proposal of tax exemption for foreign buyers expected to invite foreign buying allowed the punters to go wild on the likelihood of windfall profits in the shape of capital gains.

The market on anticipation of healthy annual and bi-annual announcements of the giants is expected to register a healthy closing for the week (3,000).

With two sessions to go, the resistant will continue to increasing Net Asset Value.

Technically, the market after giving an air pocket opening will stabilise around 2,980 to recharge to break through 3,000 points.

Hubco on a turnover of 158.591 million shares denoted an increase of Rs 1.45 to Rs 42.05; Sui Northern Gas showed a rise of Rs 1.25 to Rs 26.65 on a volume of 93.968 million shares; PTCL closed at Rs 26.25, showing an increase of Re 1 as around 89.455 million shares changed hands; National Bank of Pakistan moved up to Rs 30.35 from Rs 29.20 on business of 36.449 million shares; and Dewan Salman registered a rise of Rs 1.50 to Rs 16.95 on total deals of 28.562 million shares.

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