Share prices during last week moved in a narrow band as lack of encouraging developments forced the financial institutions and leading players of the stock market to square their positions and profit selling witnessed in nearly all sectors of the local bourses.
The stock market demonstrated range-bound behaviour. The Index seemed to have taken a pause in its journey towards the 5000 level. After staying in the range of 4800-4900 for the whole week, KSE-100 index closed at 4869 points, indicating a decline of 5.4 points (0.1 percent) over the week.
The companies continued to announce their financial results. Investors, who had great expectations for corporate results, were not disappointed most of the time. However, they disliked some results (of MCB and Maple Leaf Cement) and responded promptly.
All cement stocks were under pressure on the rumour that cement cartel had broken or was about to break.
The rumour evolved because Lucky Cement indicated that it would increase capacity and, according to a prior agreement of the cartel, no player can increase capacity until 2005.
However, Lucky's capacity will not be on line till then anyway which makes all this much ado about nothing. Analysts felt that rumours and subsequent dips in the stock prices gave excellent opportunity to buy cement stocks.
The market did not like MCB's full year results and consequently the stock came crashing down 5.4 percent to close at Rs 50.60 during the week after it announced after-tax profit of Rs 2.23 billion, or Rs 7.29 earning per share.
The bank announced 10 percent stock dividend (bonus) and skipped cash payout that was not well received by the market.
PTCL witnessed heavy volumes and punters would have locked in their profits. Traders were of the opinion that the game has just started with SingTel's CEO meeting with President Musharraf and other government officials along with PTCL's half-yearly results to be announced on Thursday.
Consequently, momentum should pick up in the stock. It would be prudent to stay long in the scrip because the scrip is expected to see new levels soon.
Index once again closed above 4900 (up 1.4 percent) and first tier stocks, like PTCL and PSO that were up 1.9 percent and 2.29 percent respectively, led the rally on Wednesday.
PSO sparked the rally on rumours that a team from Kuwait Petroleum would be coming to Pakistan to meet with PC.
The rumour was so strong so that people were even quoting March 7 as the exact date for meeting. It was after a very long time that PSO had comfortable close above Rs 290 with good volume.
"Though we don't like the stock on fundamental basis, but one can buy the stock for trading on the privatisation hype where the momentum is such that it would cross Rs 300 this time," an analyst from Elixir Securities said.
Another encouraging point was that along with PSO, PTCL also crossed Rs 40 after many months. "We have been strongly recommending PTCL for a few days and we feel that it is just the beginning of a major bull-run in the stock.
Even fundamentals reinforce as we expect PTCL to announce an EPS of Rs 2.49 for 1HFY04."
The Board meeting of PTCL scheduled to be held on February 26. The combined factor of the presence of SingTel's CEO in the country and good results will keep pushing up the price of the stock.
The second tier stocks have taken a back seat and both institutions and punters have shifted their interest to top liners.
During the last two sessions Pakistan Oilfields led the panic on strong rumours that the earnings would be below expectations.
Analysts consensus for the half-yearly earnings was around EPS of Rs 11-11.5, but some market players believed the figure would be closer to Rs 8-9.
Pakistan Oilfields completely spoiled the market sentiment and even PTCL, the strong performer of the week, could not sustain its upward move.
"We remain bullish on the stock and take these dips as opportunities to accumulate. However, please keep in mind that all trading positions should be kept at a minimum until the market settles down."
On the cement sector front, Maple Leaf Cement announced its half-yearly results, and showed an EPS of Rs 1.77. The lower than expected earnings were due mainly to a change in accounting treatment which requires a full provision for tax to be made.
Pakistan International Airline also came in the limelight following a strong rumours that the Privatisation Commission was soon going to sell 5 percent stake through the stock market.
It hit the upper circuit breaker, but profit taking activity from the seasoned investors soon check is upward trend and price movement slowed at the end of the last session.
Comments
Comments are closed.