Stocks opened the new year account on a firm note, but the covering operations lacked aggressiveness associated with a bull market. Some of the leading financial institutions were still in the process of portfolio adjustments and did not make fresh buying.

The mid-week mild reaction seems to have briefly halted the expected run-up to the coveted index level of 1,900 points. Indications are it could hit that level during the next couple of weeks on the strength of lower levels of leading base shares and the market’s oversold position.

The KSE 100-share index, after falling to week’s lowest level of 1,792 points, managed to end with a smart rise of 30.36 points or about two per cent thus adding Rs8.229 billion to the market capitalization at Rs419.805 billion.

However, as speculated all roads did not lead to stock market as had been predicted at the start of the new year. Investors are still unsure about the share business’s outlook owing to inconsistency in the financial support and some negative external factors, including the heating of infiltration row with India.

Last week, therefore, witnessed a hasty retreat from an initial new fiscal run-up, as despite half a dozen supporting factors the investors did not go beyond short-term trading. The weekend rally, however, indicated next week could see some major changes in market psychology.

“At an index level of 1,800 points (base 1,000), the broader market is not that bad and promises capital appreciation but what is lacking is the courage of conviction about the positive fundamentals”, one broker says, “the al Qaeda episode is also working against the underlying sentiment”.

All eyes are now focused on the next week trading, although opinions are divided over market direction. All are, however, united by ruling out the possibility of a major fall, sans massive activities even in volume leaders.

“The market is still in an oversold position and needs a lot of covering purchases at the current lower levels, who will bell the cat is a big question, no one is inclined to answer”, analysts said.

As expected, it opened the new year account on a positive note as investors made active covering purchases at the lower levels but as the follow-up turned shy, despite predictions of an imminent price flare-up, it beat a hasty retreat amid falling trading volumes each session.

The lowering of the circuit breaker to 5 per cent from the previous 2.5 per cent on the perception of an overdue robust technical rally may not be the only stimulating factor behind the change in market psychology. Several other factors, including its oversold position also contributed to it.

Energy shares barring the Shell Pakistan, notably the PSO, the National Refinery, the Attock Refinery reacted favourably to Sunday’s modest increase in the prices petroleum products and so did some textile shares and some blue chips on other counters.

The post-budget sessions saw a terrible calm, not warranted by objective conditions, although index fluctuated between 1,760 points on the lower side and 1,790 points on the upper side, reflecting inherent strength of the market.

“I don’t think tired bulls could be defeated on any count from now onwards”, predicts a stock analyst giving reasons for the post-budget and year-end sluggishness as: “It is now the turn for bears to watch the market rebound standing quiet on the sidelines”.

Bulls have more than one reasons to drive bears out of the market, until they fill in the portfolio gaps here and there at current levels. Although, larger decline was averted, the early run-up failed to get through.

The new national budget may still have some irritants to be removed, but technically speaking it has given the needed leverage to investors and how they interpret the fiscal measures will set the market trend.

However, proceedings in the maiden session of the new fiscal showed the finance minister’s message is well-understood by those who mean business, sans speculative trading.

“Peace with India may still be inconclusive, local law and order situation may not be ideal in the backdrop of the political uncertainty including doubts about October elections, investors could play freely on the strength of the incentives for the capital market”, say a broker.

He predicts that the market is poised for a big turnaround as both institutional traders and general investors now hate to keep to the sidelines when chances of capital gains were there. All leading shares ruling below their benchmark prices owing to late June sluggishness came in for active short-covering but there was no matching selling.

Prominent gainers were led by the Reliance Weaving, Masood Textiles, Attock Cement, the Century Papers, Ghani Glass, Javed Omer and the Pakistan Oilfields, Attock Refinery, Abbott Lab, Treet Corporation, Pakistan Services, Exide Pakistan, Azam Textiles, the PSO, and several others.

Losers were led by the Grays of Cambridge, Millat Tractors, Dawood Hercules, Packages, Shell Pakistan, the EFU Life, Ghani Glass, Wyeth Pakistan, Fateh Textiles, Lever Brothers and some others. The largest decline was noted in the Grays of Cambridge, Fateh Textiles and the Wyeth Pakistan. Trading volume rose from the lowest weekly figure of 281 million shares to 516 million shares as some of the most active scrips came in for active bouts of buying and selling.

The Hub-Power, the PTCL, the National Bank, the PSO, Fauji Fertilisers were most active while the KESC, the Engro Chemical, Sui Southern, Kohat Cement, Attock Cement, Southern Electric, the FFC-Jordan Fertiliser, Chakwal Cement, Adamjee Insurance, the D.G. Khan Cement, the ICI Pakistan, Telecard, World Call Payphones, and some others followed them.

FORWARD COUNTER: Speculative issues on the forward counter also followed the pattern of trading in the ready section but on- balance closing was on the higher side. Bulk of the business was confined to the Hub-Power, the PTCL, the PSO, the ICI Pakistan, the FFC-Jordan, the MCB and the Engro Chemical,—Muhammad Aslam