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Investors turn bullish, market witness higher profits

KARACHI — Higher corporate profits and interim cash dividend did not allow the share market to fall below the recently attained peak levels during the previous week despite the presence of some negative factors as investors were not deterred to build-up long positions on selected counters and for good reasons too.

Advent of Client Level Netting (CLN) regime on the forward counter, worries about the CFS as its limit was no raised from the current Rs55.00, almost touched and prevailing judicial crisis should have worked against the underlying sentiment but bulk of the selling was absorbed on analyst perceptions of continued bull-run.

Higher corporate announcements, notably by interim dividend by Pakistan State Oil and OGDC at 40 per cent and 20 per cent respectively, 60 per cent and 35 per cent interim already paid kept the investor interest alive on the bank, cement shares, board meetings of some of them are due during the next week. Buying in leading bank shares, notably National Bank, MCB, Bank of Punjab and some others was also boosted by their upgrading their rating on the foreign markets

The investor optimism about the future shares market is also well-reflected in the KSE 100-share index, which stood firm above the level of 12,000 at 12,235.19 as compared to 12,091.53 a week earlier, up 143.66 points for the second week in a row.

"So far as the index could stay above the barrier of 12,000 points, there is no chance for bears to play a dominant role in the near future", says a leading broker "moreover the current technical correction seems to have run its course, after having chipped well over 100 points from the it during early sessions". But if there is a downward breach in the index below the 12,000 level, it could shed another 200 to 300 points in the coming sessions, flutters triggered by higher corporate earnings here and there notwithstanding.

News from the political front may not be that encouraging in the backdrop of prevailing judicial crisis,so far investors are confidentally disgesting its negative fallout, he said.

Essentially, it was the continuation of the last week's rebound despite highly inflated level attained by some of current blue chips and analysts ruled out the possibility of any major shakeout at this stage.

A sharp rise in the share values of insurance, bank, cement and oil sectors parlty on higher earning reports and partly to positive response to new insurance policy indicates that this sector could attract fresh support at the current levels and join the rank of market trend-setters.

They apparently based their future market perception on the unfolding corporate scenario during the current week, notably interim board meetings of some of the leading companies,including oil giants, OGDC, Pakistan Petroleum, Engro Chemicals, Bank AlFalah, ICI Pakistan and some others.

According to them their pre-tax profits are much higher as compared to their previous ones and what is important is that some of them could come out with handsome dividend or bonus shares.

The profit-selling here and there at the higher levels is not that aggressive as to cause major dents in the prevailing price structure as only extreme gains are being pared on most of the counters under the lead of bank and cement shares.