The pre-budget rally continued at the Karachi share market as the KSE-100 index breached through another psychological barrier of 12,800 points and closed at its highest-ever level of 12,831.09 points on Monday on the back of fresh buying by foreign and local retail investors.
The index after breaking its previous all-time high closed at highest-ever of 12,831.09 points, up 98.68 points. On the other hand, the parallel free float market capitalisation based KSE-30 index breached through another crucial level of 16,000 and closed at all-time high of 16,009.29, with a net gain of 112.20 points.
The market started on a positive note and the KSE-100 index hit 12,862.97 points intra-day high, up 130.56 points while the KSE-30 index reached 16,055.09 points intra-day high level.
The ready market volume however declined to 359.499 million shares as compared to 410.311 million shares traded a day earlier. The futures market turnover also decreased to 51.111 million shares against 104.201 million shares changed hands previously.
The overall market capitalisation surged by Rs 30 billion to Rs 3.742 trillion. Trading took place in 416 scrips out of which 258 closed in the positive column and 123 scrips closed in the negative while 35 scrips remained unchanged.
D. G. Khan Cement was the star performer of the day with 35.502 million shares and the scrip surged by Rs 5 to close at Rs 105.25 followed by Askari Bank which gained Rs 2.50 to close at Rs 97.95 with total volume of 30.748 million shares.
The cement sector exceptionally performed as Lucky Cement, Pakistan Cement and Fauji Cement surged by Rs 5.15, Rs 1 and Rs 0.75 to close at Rs 108.15, Rs 14.75 and Rs 19.30 respectively.
In the banking sector, BoP gained Rs 0.25 to close at Rs 112.75 however Bank Al Falah lost Rs 0.70 to close at Rs 56.65. PTCL also remained active as the scrip surged by Rs 1.15 to close at Rs 52.95 with total turnover of 20.304 million shares.
In E&P sector, OGDC and POL gained Rs 0.40 and Rs 6.40 to close at Rs 122.95 and Rs 354.40 respectively. Rafhan Maize and Bata (Pak) were the highest gainers which gained Rs 78 and Rs 12.10 to close 1700 and Rs 254.10 respectively while Siemens and Pak Engineering were the highest losers which lost Rs 76 and Rs 8.75 to close at Rs 1635.00 and Rs 167.10 respectively.
Ahsan Mehanti at Shehzad Chamdia Securities said that foreign investors took fresh positions in oil and banking sectors stocks. The local retail investors remained also very active and invested in various stocks.
The cement sector performed exceptionally well on the back of a foreign brokerage house report in which it was said that there is much potential in Pakistan cement sector and the fair values of the various cement stocks are much higher than their existing values. Lucky Cement and D. G. Khan Cement closed at their upper locks.
The increasing oil prices in the international market also invited fresh investment in relevant stocks as the OGDC and POL closed in green. Hasnain Asghar Ali at Aziz Fidahusein Securities said that the likely budget and privatisation beneficiaries continued the bull dance.
This was led by cement stocks and well supported by PSO (as the authorities stay committed for sell off before June 30) the air pocket opening of 60 points plus. This not only sustained but also gained further ground and the index made yet another high of 12,862 as the low price banking and oil & gas exploration stocks joined the rally.
Although the SBP's report did raise concerns regarding inflation and deficit numbers, the market men looked least bothered as the precedence suggests that the economic managers will certainly pull something out of their hat at the time when the figures really matter.
Report by international house recommending a buy on main cement stocks got an immediate response (the main cement stocks have already gone up by 51 percent from the rates it was trading in the rainy days when the general recommendation by the leading houses was "sell").
The excitement led to upper locks in the main cement stocks. A shift was witnessed in the banking stocks, although take over of PICIC adds yet another leaf to the success story of the policy makers.
This depicts confidence the international players have in the country's economic policies day end however witnessed an adjustment, as the issue of CFS cap enhancement stays unattended. The frequently asked question is, despite cap on CFS why the market continues to gain ground?
The same question was being asked in March 05 when almost identical situation arose when the then COT was capped and the index continued the record-breaking spree. Although in 2007 the current rally is a pre-budget rally and is fundamental driven adding to the strength is the practical management take-over by the foreign players.
It took at least 15 sessions for the market to realise the importance of funding, while the issues now have just started. Although announcement of the expected measures in budget can reduce the intensity of jolts, anything unexpected or less than expected will lead to strong repercussions. The experienced people know that funding is arranged from several other channels as well and when the figures come out those are huge.
It is, therefore, recommended to avoid expanding trading portfolios while stocks trading at low multiples can be looked for accumulation on dips. Technically index will continue to face resistance around 12,927-12,933 while support stays at 12,603-12,610.