Stock market stays bullish

The Karachi share market during last week ended on June 17, 2007 witnessed bullish trend for the third consecutive week, with the KSE-100 index at one point in time crossing the 13,600 points level on the back of buying mainly in cement sector stocks.
However, the index could not sustain that level and finally closed at 13,438.47 with a net gain of 163.60 points against previous week. On the other hand, the KSE-30 index closed at 16752.65 points, down 19.15 points on week-on-week basis.
Trading improved during the week as the average ready market volume increased to 350.67 million shares as compared with 346.895 million shares traded during a week earlier. However, the average daily turnover of futures market declined to 60.5 million shares against 72.03 million shares. The overall market capitalisation peaked at Rs 3.898 trillion, up by 1.1 percent, over Rs 3.857 trillion a week ago.
The start of the market was positive on Monday. However, the index could not sustain the high level, and closed at 13,268.28 points, down by 6.59 points, due to profit taking in banking sector on introduction of capital gain tax (CGT) on banks'' shares trading, and declining oil prices in international market.
On Tuesday, the market witnessed fresh buying mainly in cement and banking stocks and the KSE-100 index surged by 57.89 points, closing at a new high of 13,326.17 points.
On Wednesday, the market witnessed a bullish session and the KSE-100 index surged by 151.07 points, closing at 13,477.24 points on the back of fresh buying by foreign investors in banking stocks and by local investors in cement sector.
On Thursday, the market started on a positive note and the KSE-100 index hit the highest level at 13,613.26 points. But, it could not sustain the momentum due to some technical resistance and finally closed at 13,462.46 points, losing 14.78 points.
On Friday, the share market once again witnessed selling pressure, mainly in banking and cement stocks and the KSE-100 index lost 23.99 points, closing at 13,438.47 points on the weekend.
Jawad Haleem, analyst at Atlas Capital Market, said that announcement of the FY08 budget was the main factor affecting the week''s rally. Budget proved to have a mixed impact on the market. For cement and fertiliser sectors it was somewhat positive. However, the introduction of new taxation clause in the Income Tax Ordinance was a blow to the banking companies as the government increased the dividend tax rate to 10 percent and capital gain tax was levied for the first time.
NIB was the major gainer due to its ongoing deal with Picic, whereas UBL was also in the limelight on the back of its GDR issue being launched by the end of this month.
Haris Dagia, an analyst at JS Global Capital Limited, said that the cement sector remained in the limelight and its market capitalisation increased by 6 percent. The cement sector performed mainly on the back of PSDP allocation of Rs 520 billion set for FY08 and higher allocation of funds for infrastructure development projects.
The market also responded positively to the visit of US Assistant Secretary of State Richard Boucher to Pakistan, the commencement of UBL GDR process, and the expected IPO of HBL.
Abdul Azeem at Invest Capital & Securities said that volatility remained pretty high in almost all trading sessions due to record high levels of the market and stretched valuations.
Paper & Board, Jute and Leather & Tenneries were the major gainers showing an increase of 10.4 percent, 8.2 percent and 8.1 percent respectively, while Glass & Ceramics, Tobacco and Transport were the major losers, with a decline of 0.78 percent, 0.50 percent and 0.47 percent respectively.
The market welcomed the various initiatives taken by the government in the federal budget. Khurram Ghufran, at KASB Securities, said that cement sector reacted positively to the Rs 520 billion allocation to PSDP while the fertiliser sector rallied around the 17.5 percent hike to Rs 470 in DAP subsidy. However, banking stocks were initially under pressure due to capital gain tax imposed by on equity trading but recovered later in the week on Wednesday.