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RECORDER REPORT

KARACHI: A new record was set on Friday when the KSE-100 index in a single session saw an appreciation of 133.44 points, crossing the 1800 level after 25 months long ordeal, as bulls went on a fresh buying spree, followed by the foreign fund institutions.

There was a huge infusion of funds from the local brokerage houses, financial institutions and foreign fund houses as the rumour of hijacking of PIA plane proved to be false one. Privatisation through the stock market, clearing of remittances of foreign investors, cut in the lending rates and release of funds from the International Monetary Fund and the Asian Development Bank to the tune of over $500 million were the main stimulating factors.

The buying from the foreign fund managers was limited as they believed that the market had already reached an optimum level and entry in full swing might scale down their capital gains. Several seasoned traders cautioned the small investors that speculative forces were in full control of the proceedings and investment made at these levels might deprive them of their hard earned money. They added that the small investors should execute deals on day to day basis and should not commit long term investment as in any session the market is likely to receive a downward correction.

The KSE-100 index finished at 1852.46 after an increase of 133.44 points on Friday, surpassing the previous record of 126.93 points attained on June 3, 1998. The market has already established new records of highest turnover and the highest trades during the current month.

The volume amounted to 412.387 million shares as against 469.407 million shares of Thursday. The market capitalisation moved up to Rs 467.75 billion from Rs 438.595 billion of Thursday.

Iftikhar Abbasi of Taurus Securities said that buying in blue chip stocks continued and as a result the index not only recovered Thursday's fall but gained another 70 points.

He added that some foreign buying was also witnessed, but it was confined to a few blue chip stocks. The market's next target was 1850, breach of which could lead to a movement towards the 2000 barrier. However, the market was extremely overbought and it might see some profit taking.

Mohammad Zubair Ellahi of KAB Securities said that the strong liquidity inflow was smoothly absorbing floating stock, pushing the market to record highs with still outstanding bids. The focus was mainly concentrated on privatisation and if anything concrete materialised in this sphere the momentum would spill over to broader range of stocks.

He added that the prevailing prices might appear on the higher side, but changed market fundamentals might push them further up. It was still advisable to remain long.

Faisal Abbas of AHR Securities said that the market sentiment was highly bullish and almost all the active issues along with the blue chip stocks scored smart gains.

Despite, Friday being the last working day of the settlement week, the bulls had complete hold on the trading and the bears, who, had established positions on Thursday, were indeed in a lot of trouble.

He added that buying spree in the high weighted capital issues like PTCL, Engro, Fauji, PSO and Shell was the main reason for the upsurge. Market men felt that the on-going bull run was basically on account of availability of liquidity which was being provided by the banks in terms of carry-over transactions facility. One could also observe that a number of weak holders were in the market. But since the liquidity was not a matter now a days and number of local funds were also actively trading, the market was going up without any major problem. The carry-over transaction charges were between 1.35 to 1.37 percent only, presenting quite a normal situation.

PTCL on a business of 170.042 million shares moved to Rs 32.30 from Rs 28.05, Hubco on a trading of 101.795 million shares improved by Rs. 1.90 to Rs 28.65, Sui Northern Gas on a turnover of 22.336 million shares closed at Rs 22.95, higher by Rs 2.70, ICI on a volume of 21.971 million shares closed at Rs 13.50, higher by 95 paisa and Fauji gained by Rs 5.50 to Rs 67.50 as 19.453 million shares changed hands.