Luminous picture portrayed by Prime Minister Shaukat Aziz last week cheered the mood of share market investors and the market index reached record high of 5633 points as investors thronged to bank and oil sectors. The KSE-100 index registered an increase of 57.17 points, or 1.03 percent, with 291 million shares, as against 208 million shares of Friday.
The index broke the previous best of 5620.66 attained on April 19 this year, following the government's decision to sell shares through stock market.
This time, according to an analyst, the market for the last couple of weeks was consolidating over 5550 level but the new support, which came following Prime Minister Shaukat Aziz's speech at Top Companies Awards at Governor House and his meeting with top bankers at the State Bank of Pakistan.
The Prime Minister said that the government would maintain the interest and inflation rates to single digit during the remaining part of the fiscal year.
He called for establishing more asset management companies in the country to pass on the benefits of the rallies at Karachi Stock Exchange.
Moreover, he assured the management of KSE to consider the proposal placed before him such as reduction in equity investment allowed to banks and tax difference to be maintained between listed and non-listed companies.
Ahmed Ashraf from Akbarally Cassim said that the market opened on a bull note and continued the spree, sustaining a closing above the all-time high of 5621. National Bank was the scrip which sparked the rally for the day.
The entire banking sector was strong throughout the session as rumours were circulating in the market that banks would be allowed to increase their stock market investments. PSO managed to close above the Rs 270 mark. The market seemed all set to create new records.
The badla increased by 1.34 billion rupees to an all-time high of Rs 29.55 billion. There was badla increase all across the board with major increases in Hubco and PSO as the ready market volumes invited investors to the badla market.
The badla rates remained below 10 percent, as liquidity was available in the market. Caution has been advised in the market as the badla levels are at their highest levels.
Ashraf Bava from Elixir Securities said that against the expectations of all doomsday prophecies, the index did not crash; rather it closed at a new all-time high.
The rally was led by PSO and supported by the rest of the oil sector. Throughout the session, the index showed no sign of weakening. Small retailers and medium sized investors gradually regained confidence, but were still not able to participate in the rally in a meaningful way.
Among oil stocks, PSO remained top trading pick which can possibly outperform the index at current levels as its privatisation saga continues to linger, whetting the punters' appetite for the stock.
Hasnain Asghar from Aziz Fidahusein said that the commitment of the Prime Minister of a healthy economic growth provided the market a desired support. Improving country fundamentals and the ongoing development projects invited an across the boarding buying.
The added attraction of December closing allowed the banking sector to lead the rally. Technically, the index faces mild resistance around 5660-5667. And major resistance around 5720-5728 and support stays around 5583-5587.
The market is likely to witness sector-wise improvement while strength in growth stocks will continue to invite offloading. It is, therefore, recommended to await high turnover and consolidation for building positions in the growth stocks. The growth stocks are no doubt trading at discounted levels, thus having high potential to perform.
Shahab Farooq from First Capital Equities said that declining badla rates, developments in Pakistan's international relations and positive outlook of the economy are likely to help the market to maintain its positive drive, although some resistance may be witnessed in the market in the coming few sessions to the 5600 barrier.
Azhar Javaid from WE said that the major question was whether the index would be able to sustain this level. With badla value at Rs 29.55 billion and badla rates inching towards double-digit, chances are that the market may take a minor correction.
Banking sector was the volume leader and Union Bank was on the front where its price increased by Rs 2.25. "With banking sector year-end approaching, we expect to see more activity in this sector. Looking forward, we expect that the market may test 5600 level due to high badla rates."
NBP moved up to Rs 73.65 from Rs 72.85 on a volume of 23.041 million shares; Bank of Punjab showed gain of Re 1 to Rs 63.40 on trading of 23.027 million shares; D G Khan Cement gained 80 paisa to Rs 52.50 on business of 23.012 million shares; OGDC registered an increase of 45 paisa to Rs 66.70 on deals of 20.804 million shares; and PSO denoted an increase of Rs 4.40 to Rs 270.25 on transactions of 18.371 million shares.