Barring an exceptional odd session or two, the volumes these last few days have been good – an indicator that investors are keenly interested. A 225-point surge Tuesday saw the KSE benchmark soaring to just shy of 12,000 – a landmark that it crossed early Wednesday, but only briefly before profit-taking took it down by 64 points.
That aside, the overall sentiment remains upbeat, the brokers are positive and the business remains brisk – especially in the fertiliser and oil sectors. Even the occasional dip acts as a bullish spur, for the bargain hunters swoop on scrips that look attractive owing to the fall.
One reason for this general buoyancy definitely is the possibility of a cut in the interest rate. The National Savings Directorate has already slashed the interest rates on its schemes across the board, including the particularly attractive one for the senior citizens. With the inflation having fallen – at least according to the official figures, though among many others things the common man may still be smarting from its brutal impact – the next monetary policy announcement may see an interest rate cut of around 100 basis points. “This is good news for the markets, for a decrease in the interest rate invariably follows by renewed interest in buying because stocks immediately become a better investment option,” says Mr Ali Malik – the boss at First National Equities, perhaps one of the country’s largest brokerage houses with 14 offices across the country.
Yet another cause for sustained enthusiasm is the solid investment opportunities in a slew of companies that have a reputation for being well-managed and as a corollary history of generous payouts, their financial reports for the ongoing year also reaffirming their status. “You see, for the December-closing shares, most third quarterly reports have either been made public or they’d be coming out in a few days. Most of these reflect improved balance sheets compared to the previous year, which means the promise of a decent profit – somewhere in the vicinity of 25-30 percent at a minimum in about three to four month’s time”, says Mian Nusrat-ud-Din, who not just happens to be yours truly’s broker but, more importantly, a very respected figure in the LSE.
Above all, if you deduce well from MND’s assessment, the risk factor in investing in such companies is reduced to around five per cent. Given the innate volatility involved with investing in stocks, with serious erosion to the value of holdings an ever present danger, this is a factor so fundamentally important for an Average Joe Investor. While the basic motive for investing in bourses remains profit that could supplement an Average Joe’s income from his day job, of paramount importance is eliminating risk to the hard-earned savings.
And now about some good buys. Fertiliser retains its appeal as a sector, and along with oil the prime mover in the current ascendant trend. Even at the risk of sounding repetitive, one would suggest Fauji Fertilizer Bin Qasim. At Rs61 apiece, it has already appreciated quite steeply, yet it retains its charm, for there is promise of further gain in value. A low-priced possibility in the sector is Fatima Fertiliser. At Rs20 a share, it has already climbed by around Rs6-7 in the last few weeks, and the grapevine says that it could go up to Rs25. But since it a new entity that has not yet announced a dividend, its last report being in the red, investment in it at best would be speculative – and should be avoided. So those looking for buys in smaller denomination could opt for the lower-end banking sector shares where a number of good buys – Bank Al-Habib and Allied Bank among them – are available. Insurance is also a sector that closes its books in December, but why it is not advisable to put money in this year, we shall discuss next week.
The writer is Sports and Magazines Editor, Pakistan Today
