January 14, 2002	Monday	Shawwal 29, 1422

STOCKS turned in a highly volatile performance during the preceding week as investors played on both sides of the fence in response to positive and negative news from the border front and on fears of war.

Border tension remained at its peak amid hopes and fears but the big question whether or not there could be a war between the two nuclear nations remained unanswered till the fag-end of the week.

However, an air of optimism gripped the market followed by reports that the president will make a major policy statement on the current turmoil leading to easing of tension on the borders. The market’s initial reaction to the reports about the president’s speech was bullish on the hopes that it could lead to peace between the two close neighbour but later adverse comments clipped the initial gains netted during the speech-related buying euphoria.

But reports coming from Washington about the border situation and fears of war worried investors as the danger of conflict was still there if one goes by the American perceptions.

But the activity considerably slowed down toward the weekend as investors stayed on the sidelines rather than making fresh commitments at the dips, apparently awaiting the speech of the president and its likely impact on stock trading.

Foreign investors who made active covering during the mid-week trading amid rumours of an imminent peace on the borders followed by the reports of withdrawal of troops turned sellers as these did not prove correct.

After crossing the psychological barrier of 1,400 points at one stage, the KSE 100-share index later gave an erratic performance, touching the low of 1,369.00 but ended above the last week’s close of 1,363 points and closed the week at 1,374.94 points, slightly above the previous level.

The market capitalization also showed a modest rise of about Rs2 billion at Rs316 billion, thanks on balance rise in the prices of mega issues.

All the blue chips raced toward their pre-reaction levels as investors hastened to cover their short positions at lower levels, with the PTCL and the Hub-Power followed by the ICI Pakistan, the PSO and Fauji Fertiliser being in forefront.

The market advance was led by strong institutional buying aided by reports of ending tension on the borders after gradual de-escalation amid reports of an “informal accord” between the high-ups of Pakistan and India at the Kathmandu summit.

All leading blue chips virtually raced toward their pre-reaction levels, big gainers among them being the National Refinery, Millat Tractors, Shell Pakistan, Siemens, the PSO and the BOC Pakistan, which rose by Rs2.50 to 10.

The visit of the British prime minister Tony Blair after having met his Indian counterpart and an offer of friendship by President Musharraf to Vajpayee are considered positive developments by the analysts leading to peace in the Subcontinent.

“It may take quite sometime to defuse the tension on borders after a massive troop build-up on both sides of the fence but the foreign peace initiatives seems to have melted the ice”, stock analysts at the W.E. Financial Services believe.

“But the market literally enjoyed the great diplomatic offensive by the President at the summit”, they said referring to president’s handshaking with a nervous Indian prime minister, which apparently led to subsequent informal talks between the two.

Any positive development on the political front to normalize the relations with India could add as many points to the KSE index until the thaw is broken, they add.

Stock analysts at the AHRL also held the same view claiming that the “market is literally dancing to the tune of political events and there are reasons to believe that the worst may be over”.

Most of the economic fundamentals are bullish and together with the prevailing lower levels, the market is poised to hit new highs in the coming sessions, they added. But it certainly needs peace at the borders to allow the consolidation forces to play their due role in similar conditions.

“It is terribly selective, but evidence of foreign buying is not hard to find”, says a leading stock broker “a good number of investors are awaiting the advent of its intensified role”.

Early plus signs dominated the list as activity spread to more shares leading gainers among them being the ICI Pakistan, Dynea Pakistan, Clariant Pakistan, Dawood Hercules, Security Papers and Fauji Fertiliser, which posted gains and so did many other after mid-week.

Wyeth Pakistan again led the losers, off Rs7.50 followed by the Orix Leasing, New Jubilee Insurance, Habib Insurance, International Industries, Bata Pakistan, Murree Brewery and Al-Ghazi Tractors. But some of them managed to recoup earlier losses on active late short-covering.

Trading volume was maintained above the 500m share mark around 600 shares, bulk of which went to the credit of Hub-Power and the PTCL followed by the ICI Pakistan, the PSO, Engro Chemical and Fauji Fertiliser.

Other actives were led by the Sui Northern, the MCB, Adamjee Insurance, the D.G.Khan Cement, Lucky Cement, the FFC-Jordan Fertiliser, Nishat Mills and several others including some second-liners.

Future contracts: Speculative issues on the forward counter also followed the lead of their ready counterparts as leading among them failed to sustain early gains.

Both Hub-Power and the PTCL proved to be the most active and volume leaders followed by active bouts of buying and selling but ended on balance-firm and so did other pivotals including the PSO, Engro Chemical and Fauji Fertiliser.—Muhammad Aslam