KSE maintains bullish trend

The stock market continued its bullish trend for the third consecutive week. The Karachi Stock Exchange (KSE) index breached through 10,300 level for the first time since touching its lowest level on June 14. The KSE-100 index registered another increase of 95.89 points to close at 10,353.52 on week-on-week basis.
The average daily turnover remained encouraging but registered a minor decrease to 225.556 million shares as compared to 250.839 million shares during the last week owing to investors' cautious move. The market capitalisation also surged by Rs 23 billion to Rs 2.903 trillion by Friday.
The positive opening of the week on Monday continued for the first two days of the week and pushed the index above 10,400 level. The share market took a downturn on Wednesday and closed at 10343.67 points as investors on the availability of high share prices booked profits.
Their passions to book more profits compelled them to upload more stocks, especially in the energy sector helped the index cross 10,400 level once again on Thursday. Friday's twin-trading sessions minimised entire week's gains, as investors adopted two steps forward and one step back strategy on the KSE. Analyst said technical correction took place on Wednesday following the SECP's notices to leading brokerage houses demanding records of all transactions made before March 2005 and in June 2006.
The recovery in the index was seen due to the ongoing corporate earning season, where bulls have to travel miles to reach the cherished level of 12,273.77 point-highest historical level registered on the KSE.
Energy stocks remained in the limelight throughout the week that also helped index to avert negative week's closing on Friday. Cement, banking, fertiliser and telecom scrips posted mixed behaviour on board.
Atlas Capital Market stated that high volatility was witnessed in the market throughout the week due to perturbed political situation as well as start of the results season. Fertiliser companies announced their half-yearly results whereas a change in the pricing mechanism announced by the ECC also brought about some uncertainty at first but later on stabilised.
A positive outlook for the telecom sector portrayed in a Merrill Lynch report somewhat drove the telecom sector upward. Similarly, expectation of better corporate results by OMCs brought them into the limelight, particularly the PSO's that surged by Rs28 during the week.
Cements and banks, however, remained more or less unchanged, whereas E&P scrips depicted reasonable gains as POL, PPL and OGDC rose by Rs22.10, Rs9 and Rs3.50 respectively.
"We maintain a cautious stance for the next week on the back of serious political issues prevailing in the country, which can even overshadow excellent result announcements," he said and added, "furthermore, though a tight Monetary Policy stance is anticipated, anything beyond expectations for the good or a bad can turn the situation upside down."
Muhammad Imran of JS Research said the outgoing week was the third continuous week of upward movement. This was mainly due to the upcoming corporate result season. Corporate results' announcements for the period ended June 2006 has started and up till now key corporate results (in banking and fertiliser sectors) were inline with market expectations, he added.
CFS has reached its official cap of Rs 24.5 billion after a gap of 10 weeks, showing the rising retail interest in the market. The financing cost at CFS, however, has remained comfortably at 14.4 percent, he added.
He said the outgoing week was a rollover week where Rs 7.4 billion open interest is outstanding in the stock futures market at the start of week. At the end of the week Rs 3.9 billion (or 52 percent) worth of July contract remained unsettled. As per historical trend, 46 percent of the future open interest remained unsettle. Cost of borrowing in future counter has decreased by 183bps and reached 5.2 percent, despite the fact that the CFS has reached its upper limit, he added.