960408

MARKET BEHAVIOUR AND ANALYSIS

The KSE 100 index closed nearly 10 points higher at 1563.09 against the overnight closing of 1553.52 the total volume reduced further to just 33 million shares against the previous 48 million. The market maintained the sober attitude where prices improved further however behind this calm the clearing day considerations cannot be ruled out.

PTC and Hub remained the volume leaders and both recorded marginal gains elsewhere the market remained deserted for most of the day.

Technically, after six days' sideways trading, time seems to be coming when index will adopt clear direction for next couple of weeks. Technically, at present market is in neutral region and showing enough potential to determine near term trend. On trading charts it is facing important resistance at 1568 and support at 1549, penetration of either side may declare next trend. However, pressure indicators are favouring for upside breakout but it would be premature to conclude any result. On Tuesday if market once again prefer to remain directionless then it may find trading range of 15 points and on Wednesday it is expected to find clear direction, on Tuesday in case of upside breakout it will be best to come with long position.

IN THE LIMELIGHT

Orix Investment Bank backed by Orix Corporation of Japan is to be listed on the Karachi Stock Exchange. The subscription for the 5.55 million shares is on Wednesday next week. Other sponsors include Orix Leasing Pakistan, IFC, AFICL Singapore, BEL, Pak Kuwait Investment and Saudi Pak. The presence of all these heavy weights strengthens the case for the new kid on the block specially if we look at the performance of the sister concern in Pakistan i.e. Orix Leasing Pakistan which is amongst the leading leasing companies in the country which has shown tremendous growth in assets, lease portfolio and profitability.

1994 1995 Growth

Total Revenue 320.4 466.7 45.4%

Lease Contracts 312.5 451 44%

Leases & Installments 1900 2800 47%

Profit Growth 53 100 89%

An other look at the sector though presents relatively gloomy situation as the companies in the sector received heavy battering due to fall in the stock market, as most of investment banks having large exposure of the equity market have huge realised as well as unrealised capital losses. Again this is a positive point for Orix Leasing as it will be making a fresh start with a clean balance sheet, besides the lessons of the past must teach every investment bank to base its activities on stable sources of earnings instead of fragile capital gains. The strong professional support available to the bank increases the likelihood of the bank entering heavily into fee based activities coupled with stable fund based activities. While the fee based income is relatively stable it is likely to grow at a steady pace and it will require relatively longer time to reach certain income and profitability level.

The backing by the Orix Japan is expected to play a vital role in the fields of fund based activities and availability of any foreign credit can very well be expected in future years. The presence of local giants will definitely make it possible bring more and more business for the company. With the boost to the corporate debt market of the country the services related to issue of TFCs are likely to contribute significantly towards the profitability of the investment banks, other growth areas will be advisory services related to mergers and acquisitions, arrangement of finances and fund management.

The depressed capital market conditions, increased competition within and without the industry, depressed economic condition definitely put a barrier on the profitability of the investment banks yet these barriers to some extent can be compensated through efficient management of the bank.

With the gradual improvement expected in the underlying factors the situation in the stock market is likely to improve and the equities down mainly due to market factors are likely to show improvement, and the scrip with strong profit potential in future are likely to show steady growth in its price. Given a fresh start with a clean balance sheet, the strong management with expected concentration on stable activities and expanding financial markets of the country the scrip has bright growth potential in the long term.

TRADING MAJOR MAJOR MARKET 10 DAYS 30 DAYS NET

SHARE TREND RANGE SUPPORT RESISTANCE SITUATION M.AVG M.AVG CLOSE CHANGE

KSE INDEX CONSOLIDATIVE 1548-4885 1520.00 1595.00 NEUTRAL 1565.00 1695.00 1563.09 9.57

LTV SIDEWAYS 4.25-4.75 4.00 5.00 NEUTRAL 4.50 4.70 4.60 0.05

PLATINUM SIDEWAYS 7.00-8.00 7.00 8.00 NEUTRAL 6.55 7.05 8.26 -0.25

CHERAT SLIGHTLY UP 33.00-35.00 32.40 35.70 S. OVERSOLD 34.80 37.80 33.50 0.00

ASKARI BANK SIDEWAYS 31.20-34.80 30.00 34.00 S. OVERSOLD 32.30 34.60 31.50 0.00

IBRAHIM FIBRE SLIGHTLY DOWN 7.00-8.00 7.00 8.00 NEUTRAL 7.57 7.90 8.00 0.75

METROLIFE SIDEWAYS 9.00-10.00 9.00 11.0 NEUTRAL 10.25 11.35 9.50 -0.25