Share values for the second consecutive week scored more than 100 points last week ending on July 9, 2005, despite the fact that market players were anxiously waiting for some positive news related to sell-off of Pakistan State Oil and carryover transaction phase-out issue.
Undoubtedly, over the week, expectations of easing in CoT phase-out schedule, global oil prices and news on PSO privatisation, boosted market sentiment. As a result, the market closed on a positive note, up by 1.7 percent.
During the week, the market also faced the news regarding the separation of 'ready' and 'futures' markets. However, no concrete announcement in this regard was made.
The KSE 100 Index gained 124 points, up 1.7 percent, from previous week's closing at 7464 points. Market capitalisation was recorded at Rs 2.1 trillion (US $35.4 billion) on Friday--an increase of Rs 38.6 billion over the week.
Average daily ready volume was on the lower side at 183.2 million shares, against 199.2 million shares in the previous week. The overall leveraged position increased from 201.6 million shares, or Rs 21.7 billion, of previous week, to 205.8 million shares and Rs 22.7 billion.
Speculators and punters remained positive regarding ease in scheduled CoT phase-out, thus boosting positive rally in the market. Furthermore, Privatisation Commission Secretary's statement regarding likely announcement of PSO privatisation date in the first week of August further triggered positive sentiment.
According to a leading trader, sentiment of the market hinges on any extension coming from the beleaguered regulator in the present badla scrips. At present, mere Rs 2 billion lines of margin financing considered as an alternative of carryover trade have been approved by a few banks, against which nearly a meagre amount of Rs 200 million has been disbursed to some of the members, thus causing imbalance in the market making.
Liquidity of the market remained a question mark in the absence of a viable margin financing at a time when only six weeks are left to phase out badla.
NIT dividend payout of Rs 3.3 per Unit and OGDC acquisition of two new exploration licences also supported this rally.
Ready futures spreads remained on the higher side in the week.
Investors and analysts were closely watching the market and would have noticed a significant change in the market action. After being stuck in a tight consolidation state for the last month in the 7300-7500 range, and then further tightening of the band to 7400 to 7500, consolidation was further intensified by drying up of volumes in the later part of the week and first two days. The breakout came when funds, that had been sitting on cash till June 30 due to the closing of the financial year, decided to enter the market after realising that investors were not ready to sell stocks at any cheaper prices.
According to an analyst at AKD Securities the KSE-100 index broke through its tough trading range resistance of 7512 on Tuesday. The breakout was confirmed with strong trading and volume spike on Wednesday. During the last three trading days of the week, the market moved in a bullish pattern, but in a very cautious manner, which was an extremely healthy pattern to follow after all the volatility seen in the recent past.
It was interesting to observe that the market action during last couple of weeks that led to the current breakout the index had been range-bound at 7300-7500.
Going forward, the upcoming week is crucial for the stock market in the wake of the proposal forwarded by the KSE management to the regulators, pertaining to extension sought on phasing out of the existing badla scrips, owing to non-availability of margin financing to the participants across the board.
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