Stock market investors returned into the fray following a long weekend for Eid holidays where they waited for development on PTCL privatisation, which remained conspicuous by its absence but speculations helped the index to score a hefty gain of 4.2 percent.
Speculations regarding the privatization and the impact of several above-expectation corporate results helped the KSE-100 close the week with a 4.2 percent, or 357-point, gain. The KSE-100 closed at 8794 at the weekend.
Leveraging through the November stocks futures and CFS portrayed an increase, with the CFS rate remaining on the higher side and stock futures spread declining considerably.
The market opened on a very jubilant note after Ramazan, followed by Eid break. During the 4-day week, the KSE-100 index momentarily breached the 8800 psychological barrier, but failed to sustain it, closing at 8794.
This bullish trend emanated from the positive news received on PTCL sell-off front, whereby Etisalat was granted another two weeks extension to make the remainder of the payment (US $2.34 billion) for taking over 26 percent shares, with management control, of Pakistan's telecom giant.
This rally was also well supported by the strong fundamentals of major sectors, namely oil, banking and cement. Profit selling was observed during the first session of Friday followed by a good recovery to end the day almost level with that of the previous day's closing. Development on PTCL privatisation is expected to dictate the market sentiment.
The Index is near its strong resistance level, which indicates possibility of bearish behaviour. The Index is above its short-term and mediumterm moving averages. Pressure indicators are in neutral zone. Strategy is to sell on strength, said Asif Warsi, analyst at Investcapital Securities.
PTCL gained Rs 5.50 during the week, with good volumes. PTCL is trading above its short-term but below its medium-term moving averages. The scrip has a strong resistance level of Rs 67.40 and breakout of this level would indicate further upward move to Rs 70. Pressure indicators are in the neutral zone. Strategy is to buy between the range of Rs 60-63.
Hubco gained Re 0.45 during the week, with low volumes. Hubco is trading below its medium-term and short-term moving averages. RSI is in the neutral zone, which indicates consolidation. Strategy is to buy in the range of Rs 20-Rs 22.
PSO gained Rs 3.80, with moderate volumes. PSO is trading above its short term and above its medium-term moving averages. Pressure indicators are in the neutral zone, which indicates consolidation. Strategy is to sell between the range of Rs 425-Rs 435.
Pakistan Telecommunication Company Limited (PTCL) was yet again the sentiment driver for the index, as the scrip moved from negative to positive territory on the back of rumours about the transaction coming through or not, taking the market along with it. As the week was predominantly marked with optimism regarding PTCL, the market registered positive closings on three of the four trading days.
Waleed Mohsin, research analyst from KASB Equities, said that a final announcement regarding outcome of negotiations with Etisalat over PTCL take-over was expected over the weekend. Should this come through, it would be a major determinant of the market's direction over the short term. Other than PTCL, review of domestic oil prices would also be tracked with interest. If the government decided to reduce prices of domestic petroleum products, oil marketing companies (OMCs) would be negatively impacted. With the uncertainty regarding PTCL dominating the market, one should go long in fundamentally sound stocks. Pakistan Oilfields Azgard Nine, Chenab Ltd, Fauji Bin Qasim, Kapco, ICI Pakistan, Nishat Chunian, Nishat Mills and Packages are the picks for the week.
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