20000113

RECORDER REPORT

KARACHI: The Karachi Stock Exchange (KSE) made history on Wednesday as its volume touched the highest ever mark of 314 million shares (surpassing the previous record of 290 million attained a year ago) as buying spurted from all quarters and bulls went berserk, the index breaching the 1500 points barrier.

The KSE registered the highest turnover of 314.769 million way above the previous record of 290.059 million shares set on May 25, 1999. Another record made was the highest number of deals in a single day. The market executed 50,355 trades. the previous record was of 42,769 on July 6, 1999.

The KSE-100 index registered an increase of 71.05 points or 4.74 percent to 1570.85 from 1499.80 of Thursday. The volume moved up to 314.769 million shares from 131.325 million shares of Thursday. The market capitalisation finished at Rs 403.711 billion from Rs 387.523 billion of Thursday, surpassing the Rs 400 billion mark.

After a lapse of over a year, which showed the restoration of the investors' confidence following the economic package announced by the present government.

Nadeem Naqvi , head of research at International Asset Management Company, said that the important assessment after Wednesday's market performance to be made is whether this represented post Eid euphoria, speculation, oil and gas sector privatisation and deregulation or a more fundamental market re-rating by domestic investors.

He felt that all these elements had played a role. The euphoria and speculation about privatisation might have led to the market becoming over-weight in the short-term which meant that a possible correction of 30 to 35 points could occur soon. However, there was no doubt that domestic investors had been in the process of re-rating the Pakistan spread for the last several weeks and this re-rating still had some way to go barring any external shock.

Nadeem pointed out that the major positive fundamental on the economic front included improvement in government revenue collection, reduction in domestic interest rate, continued low inflation and improving capacity utilization in industrial sector in the last quarter of 1999.

"With banks poised to reduce lending rates further, the financing cost to industry would decline by over 500 basis points compared with costs three years ago and the would translate into better net margins, higher profitability and rising returns on capital employed", he added.

Nadeem believed that this was the basis for the fundamental re-rating that the market was experiencing. But it would remain volatile due to narrow investible base.

Azhar Shehzad of City Securities said that the general sentiment of the market remained bullish. Some positive steps taken by the government to privatise the public sector as well as to reschedule the financial liabilities had boosted the confidence of the investors.

He said that technically the market had been highly overbought on daily and weekly chart. The index might take a dip to the 1520 level. The international stock markets were rising and bullish sentiment would stay but there was room for technical downward correction to 1520.

A couple of positive developments cheered the mood of investors, IMF team is arriving this week, the government has established a gas regulatory authority to expedite the privatisation process of two gas companies and the State Bank on Tuesday released 50.3 million US dollars for Hubco's debt service payment to foreign lenders.

Both gas companies recorded appreciable gains, Sui Northern Gas went up by Rs 3.65 and Sui Southern Gas by Rs 5.95.

Hubco on a trading of 87.973 million shares denoted an improvement of Rs 1.60 to Rs 23.65, PTCL rose by 85 paisa to Rs 24.60 on total business of 61.821 million shares, Sui Northern Gas on a turnover of 40.629 million shares closed at Rs 18.30, showing a rise of Rs 3.35, PSO saw an increase of Rs 11.40 to Rs 223.90 on total deals of 23.458 million shares, and ICI on a volume of 22.753 million shares recorded a rise of 15 paisa to Rs 11.40.