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Index breaks all barriers, best yet to come: Analysts

KARACHI — The KSE 100-share index last week broke all previous all-time high record of 12,273.00 points established in last year's boom at 12,369.70 on heavy foreign buying and local financial support and analysts predict the best is still to come in the coming weeks.

After having broken the previous record of 13,369.70 the very next day, at 12,433.22,touching the intra-day high of 12,494.00,only six points short of next target of 12,500,the KSE 100-share index finally finished the week at.12,512.08 up 276.89.

Much water has already flown down the bridge,some of the seceptics are still wandering and mulling whether or not the current price flare-up is manipulated or genuine.

“Analysts at Morgan Stanley may not be saints but have a fair idea of future market trends around the globe”, says Zia Javed a leading stock analyst at the local bourse “the index level of 14,000 points they foresee is based on the existing corporate heat,dividend yields and 300 to 500 per cent price flare-up in banking, oil and some cement shares”.

There may be interruptions in between in the forms of technical corrections but next target set for the index based on the presence of strong foreign fund buying is now looks not that elusive, he said.

“It was a judicious blend of both local and foreign buying,although it was terribly confined to selected counters”, analyst Faisal A.Abbas said “but it has a positive impact on other blue chips also”. The index has been creeping steadily to stay above the level of 12,000 points after foreign agency predictions that it could hit so far considered an elusive target of 14,000 levels during the current year. Cement shares were in the forefront of actives followed by reports that India, which needs 20 million tonnes of the commodity to bridge the supply gap has allowed import from Pakistan. Banks followed them on strong foreign buying and so did oil shares.

Analysts at a leading research house said cumulative foreign portfolio investment during the year amounts to 10 per cent of the free-float market capitalisation of about 460 billion and as the SCRA (Special Covertible Rupee Account) figures are rising each month foreign buying is gaining in stature.

“There could be technical corrections here and there before the target was hit but higher corporate earnings and payouts including bonus shares reflects that the new target may not that far”, analyst Ahsan Mehnati believes. But some others said future direction of the market will be finally set by the happening on the political front, notably the judicial crisis as its negative fallout on stock trading could be enomous.

Heavy speculative buying in cement shares followed by reports that India has allowed import of cement from Pakistan featured the trading where other leading shares also maintained their upward drive.The perception that leading among them offers higher capital gains at the current levels.

Bank shares followed them partly on reports of higher profits and partly to strong foreign interest in some of the leading banks and both the sectors pushed the index further higher and overshadowed the broader market,floor brokers said.