20000108

Rs 20.854 billion jump

in stock values

RECORDER REVIEW

KARACHI: Stock values recorded a jump of Rs. 20.854 billion during the past week as several positive development hosted the market, pushing the KSE-100 index to see more than a year high where inherent sentiment was still quite strong.

The KSE-100 index registered an increase of 91.09 points or 6.5 percent, to 1499.80 from 1408.91 of the previous week. The volume moved up to 436.876 million shares from 411.292 million shares of the preceding week. Market capitalisation finished at Rs 387.523 billion from Rs 366.669 billion over the previous week.

Though the sessions at the market were curtailed by one proceedings, bulls led the rally and buying fervour was witnessed at every counter. It was believed that the consistency in economic situation assured by the government, better law and order situation in Karachi and deregulation of oil sector, and especially the speeding up of privatisation process of gas units helped to build up confidence of general investors.

On reports that the government has been keen to expedite the privatization process, the Sui Northern Gas shares have been quite active in the last couple of sessions. The price improvement of the scrip outperformed the gains made by the KSE-100 index. The share price of Sui Northern last week saw a quantum jump of 22 percent while the index recorded a rise of 9 percent.

Two factors which fuelled the bullish flames into the stock market were the government's decision to cut the lending rates for industrial sector by two percent and State Bank move to phase out foreign exchange curbs.

All the public owned banks have cut their lending rates up to two percent to spur the economic growth in the country. Furthermore, the reduction in National Saving Schemes by two percent also geared fresh buying in the equities. Analysts believed that cut in the schemes would give boost to investment in the share market. The scrips were still attractive and offered an ideal opportunity for capital gains.

Another development which cheered the mood of investors was the SBP's decision which allowed repatriation of funds from the country. The Bank cleared all pending cases of outward remittances which, according to market sources were around $38 million.

Traders opined that this step would prove a positive incentive to foreign portfolio investment and would help restore the confidence of offshore investors.

A leading analyst said that reduction in rates of the national saving schemes and the lapse of deadlines for the banking lottery schemes are diverting major liquidity in the stock market.

Also, he added, SBP's declaration that all stuck up foreign investors remittances have been cleared and future remittances would be disposed of without any delay, is being perceived as a big positive step by investors. They felt that this could draw foreign investors back to the KSE.

Hub Power recorded appreciable gains as investors hoped that soon the matter would be resolved with the government over the tariff dispute.

The Chief Executive of Pakistan, General Pervez Musharraf, while spelling out the economic agenda for the revival of the country last month, gave Wapda and ministry of water and power 30 days to conclude investigations against the company. Traders hoped that the matter would be resolved soon, but a few believed that the stance of Wapda has been quite strong and as the state-run company has suffered colossal losses, the chances are quite remote and might take longer time to resolve.

However, traders said that the market was likely to show some more strides after Eid holidays. The index might cross the coveted level of 1500 points after a long bearish spell and might even to touch the 1550 mark. However, the technical downward correction is also in sight and might herald soon because after every passing session the presence of weak holders have increased substantially.

Genuine buyers and financial institutions have executed sizeable deals in choice scrips, but seasoned traders believed that gains could only be consolidated if foreign investors peep into the stock market.

PTCL rose by Rs 2.05 to Rs 23.75 on total business of 112.252 million shares, PSO saw an increase of Rs 18.50 to Rs 212.50 on total deals of 70.794 million shares; Hubco on trading of 65.656 million shares denoted an improvement of 70 paisa to Rs 22.05, Sui Northern Gas on turnover of 40.813 million shares closed at Rs 14.65, showing a rise of Rs 2.65; and ICI on a volume of 37.410 million shares recorded a rise of 75 paisa to Rs 11.25.