Fresh buying in banks and oil stocks build up a strong rally, helping the index to make most of Monday''s recovery on expectation of good corporate results and rumours that NIT is to pay handsome dividend.
Banking scrips performed exceptionally well on the back of higher dividend expectations from NIT. NBP, BoP and Faysal Bank closed limit up at Rs 216.30, Rs 84.05 and Rs 63.00 respectively while MCB and Union Bank closed near their upper locks at Rs 213.45 and Rs 75.00 respectively.
Prime Bank also closed limit up for the third consecutive day on the back of reports of its acquisition by a foreign bank. The sharp upsurge in international crude oil prices also contributed to the rally in energy stocks. However, volatility prevailed in energy scrips as OGDCL, POL and PSO closed 4.3 percent, 6.0 percent and 4.1 percent higher from their intra-day lows while PPL closed at its upper circuit breaker at Rs 212.20.
Bulls also showed their dominance in cement scrips. D.G. Khan Cement, Lucky Cement and Fauji Cement posted respective increments at 1.6 percent, 2.3 percent and 1.1 percent to Rs 86.85, 100.70 and 18.50 respectively.
Announcement of US military support to Pakistan was a major contributing factor. Investors started accumulating E&P scrips pushing the sentiments up during the day.
Hasnain Asghar from Aziz Fidahuesin said that the official announcement of GDR offering by MCB Bank fuelled the bulls and the excitement allowed the index to breach its immediate resistance of 9827-9833. Index however, failed to sustain the high levels, achieved during the session (9912) as nervousness forced the market men to liquidate their positions by the end of the session.
Technically the inability of the index to close above the immediate resistance might force the index to consolidate around its support level of 9750-9757 while over head resistance stays at 9990-9997. Availability of main stocks at discounted levels can be capitalised while nervousness would continue to disallow recommendations of intra-day trading positions.
Noor Hameed, from Elixir Securities said that stocks got ultimate strength with three brothers on the top namely NBP, BOP and FABL as their godfather National Investment Trust (NIT), the state-owned mutual fund giant, is expected to announce its FY06 results this week.
"We expect highest-ever dividend pay out from NIT to its unit holders of Rs 4.00-4.50 per unit compared with last year''s dividend pay out of Rs 3.30. Market rumours are that NIT might pay close to Rs 5.00.