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Stock: a week of allround records

RECORDER REVIEW

KARACHI: The share market last week scored a double where the bourse saw several records breached including the volume which surged to new heights and KSE-100 index surpassed 1800 points mark with punters hoping that the index is nearing to reach 2000 points mark.

There was infusion of funds from local brokerage houses, financial institutions and foreign fund houses as the rumour of hijacking of PIA plane proved to be false. The privatisation of states owned entites through stock market, clearing of remittances of foreign investors, cut in the lending rates and release of funds from the International Monetary Fund and Asian Development Bank to the tune of over $500 million were the main stimulating factors.

The KSE 100 index closed at 1852.46, after an increase of 226.36 from 1626.09 of the previous week. The market twice established new records of highest turnover during the week.

The volume amounted to 2.045 billion shares as against 705.017 million shares of previous week. Market capitalisation closed at Rs 467.75 billion , showing an increase of Rs 50 billion.

A leading trader said that the companies which are on privatisation list inspired investors as the government aims to unload their shares through stock market. One of the major positive factors for the market was the buying interest, which was not confined to a few scrips, rather, it spread to second-tier stocks and even some of the textile companies broke the shackles of bears and were in the plus territory.

The relaxation of curbs on forex regime by the State Bank of Pakistan fuelled bullish sentiment and there was robust rally despite overbought position of the market. The SBP has restored the powers of the banks and authorised foreign exchange dealers with regard to remittances which had been withdrawn in July 1998. The banks no more require SBP's permission in case of remittances of dividends to non-resident shareholders besides other repatriations. This is going to have a positive impact on the capital market as it is expected to give a big boost to foreign investment which had suffered a serious setback after the imposition of restrictions in July 1998 following nuclear tests.

During the week a rumour gripped the stock market which gave a heavy blow to the price run up. Heavy panic selling was witnessed following the rumour that a PIA plane had been hijacked. This send grave signals and the investors offloaded their positions in haste.

PTCL was up by almost 25 percent on reports that the Privatisation Commission would soon finalise the modalities to unload its shares to foreign investors. Hubco also notched notable gains as the government withdrew one of its cases pertaining to meter tampering. On a high volume, the scrip gained 19 percent and traders said that the IPP finally made the blistering move expected ahead of perceived resolution with Wapda.

Fauji staged a recovery amid speculation that it would give a better dividend. The prospects of the fertilizer sector are quite positive and its profit are likely to show some improvement in this fiscal year as the government has imposed 10 percent regulatory duty on imports of urea.

Like PTCL, Sui Northern Gas would also be privatised soon. This hope triggered heavy buying in the scrip and the equity from its low of Rs 8 touched new heights of Rs 22.95. The company on Friday shot up by 13.3 percent and it went off on spot basis.

The market during the past three weeks rose by almost 400 points and still there is room for improvement, said a dealer. However, the market might go through some downward correction soon as several scrips have entered the overbought zone.

The index might cross the 1900 points mark if buying from local brokerage houses, financial institutions and small investors continued unabated this week. Foreign buying was limited but emerged on counters quite frequently. Traders hoped that the phasing out of foreign capital restrictions might boost the confidence of these entities and they might re-enter the rings with a bang soon.

PTCL on a business of 544.417 million shares moved to Rs 32.30 from Rs 25.15, Hubco on a trading of 371.904 million shares improved by Rs. 4.65 to Rs 28.65, Sui Northern Gas on a turnover of 104.130 million shares closed at Rs 22.95, higher by Rs 4.80, ICI on a volume of 114.959 million shares closed at Rs 13.50, higher by Rs 2.15 and Fauji gained Rs 9.55 to Rs 67.50 as 58.817 million shares changed hands.