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Stocks rise on heavy buying in oil and banking sectors

The KSE 100-share index closed at 14,099.94 points adding well over Rs218 billion to the market capital amid hopes that president Musharraf may be relected for the second time despite legal problems and resignations by the parlimentarians of the opposition, market sources said.

If the larger supreme court,which is currently hearing the petition of presidential hopefuls seeking court ruling on president Musharraf's eligibility to seek reelection, stays election due on Oct 6,pending the final verdict there could be a big jolt in the existing price pattern, analyst Ahsan Mehanti fears.

But if the ruling is positive as the previous one, there could be a renewed buying euphoria, which could take the index to new highs during the current month, ending the chief investor worry of political uncertainty, he said.

It is for the second time during the current year that the index has broke through the psychological barrier of 14,000 points, the previous feat was achieved in last March when it hit the so far all-time peak level of 14,236.00 points.

Stocks reacted bullishly apparently to the perception of continuation of the current financial and economic policies as the way for Musharraf's reelection as president for the second term is clear after the dismissals of opposition petitions by the apex court but some analysts said the legal battle may not have over yet.

The KSE 100-share index soared by 700 points or about six per cent at 14,099.94 adding about Rs200 billion to the market capital at Rs4.3 trillion or $72 billion in the post-apex court verdict, which is said to be all-time higher so far.

The free-float 30-share KSE index showed its career-best single-session rise of 593.60 points or 3.67 per cent at 17,333.43 and credibly matched the recent all-time high gains netted by its counterpart, the Mumbai Stock Index over the last week of unprecedented price flare-up on massive foreign buying closing well over it at 17,300.00 points.

The bulk of the buying interest remained confined to half a dozen leading base shares,notably MCB, OGDC, National Bank, Pakistan Petroleum, Pakisan Oilfiels, Engro Chemial and some others, which together hold a weightage of well over 50 per cent in the index.

Literally investors were a bit shaky and did not go beyond the safe havens of oil, bank, and cement sectors as no one was willing to take even a calculated risk at this stage, floor brokers said.

“We don't call the snap run-up a deceptive net”,they said “but the situation is certainly fraught with high risks as there could be some surprises too in the coming legal battle in the supreme court”.

The initial buying euphoria could receive a major setback amid conflicting reports including presidential candidates claim to seek review of the last Friday's apex court's larger bench ruling by the full court, analysts said.

The dismissal of petitions by the supreme court seeking verdict on his dual office on technical grounds and official seal on his eligibility to seek reelection by the election commission after accepting his nomination papers has cleared the way for him to contest presidential election on Oct 6, analyst Ashraf Zakaria said.

“The legal battle seems to have divided investors in two distant groups”, he said "those who think that the president could wade through the legal hitches led by the bulls”.

But those who think otherwise though did not turn bears, mostly played safe awaiting fresh developments on the legal front, he added “the talk of postponement of the presidential election for a specific period pending the apex court decision on the review petition could work against the market, terribly blunting the buying euphoria”.