Border concerns turn equities into volatile temper
Stocks, during the previous week, turned into a highly volatile mood as investors were not inclined to hold long positions, despite the peace offensive launched by the big ones and the successive visits of the international peace missions.
The entire proceedings were based on the short-term basis as prices rose and fell, depending on the positive and negative news from the borders, and the intensity of the cross-border firing.
“What seems added a new element to the war hysteria is a fresh demand from the presidents of Russia and the US, that Pakistan should stop cross-border infiltration”, stock analysts said.
The demand has added a new dimension to the prevailing crisis and the leading investors have planned their future strategy in the backdrop of the emerging reality and its allied disadvantages, they added.
Stocks, therefore swung in tune with the reports from borders as the leading investors and the day traders played on both sides of the fence and did not take long positions amid fears of war with India.
Analysts were divided over the future direction of the market. Some say it is time to buy, some others say keep away until sanity returns on the borders. But the undertone reflects all is not well with the market and to take big stake even in the pivotals at this stage, which are manoeuvring to breach through their circuit breakers, is fraught with high risks.
But the market demonstrated in more than one ways that it was highly sensitive to the current war hysteria and was yearning for peace between the two nuclear nations as its early run-up in response to the Russian peace offensive.
The KSE 100-share index earlier in the week did rise by about 15 per cent on the hopes of a peace being brokered by the US and Russia, later it reacted on the negative news. The end was subdued as an abortive effort to breach through the psychological barrier of 1,700 points failed. It ended the week around the previous level of 1,663.3, off only 0.13 points.
The market capitalization also suffered a modest decline of Rs1.008 billion at Rs387.160 billion.
From the successful test-fire of new range of missiles to the tough speech of the president, signalling his preparedness to reply to a possible Indian attack, investors remained terribly shaky and abhorred to have a big stake until the “sky was clear and there was no fear of lightning”. “The agony of the small saver was there who could not precisely decide how to react to war-like situation and what to do with his life’s saving put in share business”, commenting on the investors’ dilemma says a leading member of the KSE.
However, everyone cherished the market’s early run-up spilled over from the previous week’s peace aided-robust rally, attack on the Indian police camp and the killing of a couple of soldiers, which triggered panic selling amid fears of Indian retaliation.
Earlier in the session, investors also derived strength from the perception that the intervention of the big two could well mean the war hysteria would fade out during the next couple of weeks as the “peace offensive really aims at a working relationships between the two close neighbours”.
“The goal of peace may remain elusive but one thing appear certain that the intervention of the big two, notably Russia, considered to be an ally of India, has altogether changed the border scenario”, comments a leading member of the KSE on the new emerging situation in the sub-content.
Investors were quick to find cue for the future political scene and hated to miss the rising market that too, at the still attractive levels.
“I don’t, think there is a possibility of snap reversal”, one broker predicts, “the process of parleys set in motion may not lead to renewed confrontation between the two nuclear nations”.
That was perhaps why the investors ignored the reports of fresh causalities from the LoC in cross-firing and maintained their moping operations, he adds.
The index had risen by 12 per cent during the early two sessions, reflecting the inherent strength of the market”, brokers say,” it also signalled how the market was yearning for peace and calm on the borders of the two neighbours”.
An idea of massive buying at the lower level may well be had from the fact that the Hub-Power finished the session close to its circuit breaker ceiling limits. The ICI Pakistan, the Engro Chemical, the FFC-Jordan Fertiliser and several other blue chips also showed smart rallies on heavy buying.
As a matter of fact the fresh sustained run-up was led by the energy sector amid hopes of a substantial increase in sales after the May 15, sharp increase in petroleum prices. All rose in unison, leading among them being the Shell Pakistan, the PSO, the Pakistan Oilfields and the Pakistan Refinery.
Despite mid-week selling the on-balance close was on the higher side. The recovery was allround and reflected that investors are now sure that the border situation could ease during the next couple of weeks and sound market fundamentals will play a dominating role.
The big gainers were led by the Engro Chemical, the PSO, the Shell Pakistan, the Wyeth Pakistan and the BOC Pakistan. These were followed by the Kohinoor Weaving, the Security Papers, the Wyeth Pakistan, the Mari Gas, the Tri-Pack Films, the Noon Sugar, the Siemens Pakistan, Dawood Hercules and some others. Later selling, however, allowed them to finish with clipped gains.
Losses on the other hand were fractional barring the Treet Corporation, the BOC Pakistan, the Ferozsons Lab, Shafiq Textiles, the Packages and many others.
Trading volume showed a modest rise at 570 million shares as compared to 486 million shares a week earlier, bulk of which went to the credit of the current favourites such as the Hub-Power and the PTCL followed by the PSO, the MCB, the Sui Northern, the KESC and the FFC-Jordan Fertiliser.
Other actives were led by the Engro Chemical, the ICI Pakistan, the Pak PTA, the National Bank, the Japan Power, the World Call, Dewan Salman and several others.
FORWARD COUNTER: Speculative issues on the forward counter also followed the lead of their counterparts in the ready section, although on-balance closing was mixed barring the PSO, which came in for heavy selling but on the other hand the Engro Chemical and some others managed to finish with good gains on strong buying.
