KARACHI, July 16: A strong burst of institutional buying put the market back on the rails on Tuesday but analysts are uncertain whether or not the snap rally could be sustained.

Energy shares led the market recovery on active short-covering triggered by a modest downward adjustment in selling prices of POL products. The oil marketing companies have been expecting a big cut in the backdrop of previous two successive increase.

An idea of active short-covering may well be had from the fact that all the leading shares virtually raced toward their pre-reaction levels under the lead of blue chips.

The heavy battering being received by the dollar, notably on the kerb market, reflects that investors are in for big catch in the coming sessions.

“The money is outflowing from the dollar to stocks like anything on panic selling after it was quoted at a discount of 77 paisa against the euro,” one money changer claimed, adding “liquid funds also flowed in euro which was quoted at Rs60.25/60.40 in kerb against the dollar close of Rs59.57 and Rs59.63 for buying and selling, respectively.”

The KSE 100-share index, which received massive battering on Monday recovered in part the previous losses on the strength of leading base shares and finished higher by 27.01 points at 1,762.36 as compared to 1,735.35 a day earlier.

“Essentially, it was the advent of new account institutional buying, which lured everyone back in the rings,” analysts commenting on the snap rally in the backdrop of the overnight panic selling said. “As a matter of fact the market has overreacted to the Monday’s events, including death penalty for Omar Sheikh in Daniel murder case,” they added.

Negative external news, notably from across the border will continue to pour in, but investors seem to have learned to live with them and there is possibility of a big run-up fuelled by the current lower levels.

“The market is still in an oversold position and could attract any amount of covering purchasing at the current attractively lower level provided the institutional traders continue to play their due role,” brokers said.

Mehmood Textiles, PSO, Aventis Pharma, Lever Brothers and Wyeth Pakistan were leading among the gainers, rising by Rs3.40 to Rs24 followed by Pakistan Oilfields, Shell Pakistan, Millat Tractors, National Bank, Clover Pakistan, Lever Brothers and Chakwal Spinning, up by one rupee to Rs2.05.

Losers were led by Ellcot Spinning, Blessed Textiles, Javed Omer, SK&F and Grays of Cambridge, off one rupee to Rs14. Other losses were mostly fractional.

Trading volume rose further to 74m shares from the previous 65m shares as advancing shares maintained a strong lead over the losing one at 175 to 67, with 44 shares holding on to the last levels.

The most active list was topped by Hub-Power, up 40 paisa at Rs23.65 on 19m shares followed by PTCL, higher 40 paisa at Rs17.20 on 15m shares, PSO, up Rs4 at Rs135.85 on 13m shares, National Bank, firm by Rs1.50 at Rs20.45 on 8m shares and Telecard, higher 90 paisa at Rs11.95 on 3m shares.

Other actives were led by MCB, higher by 75 paisa on 2.348m shares, Engro Chemical, up Rs1.45 on 2m shares, FFC-Jordan Fertilizer, steady by 25 paisa on 1.744m shares, D.G. Khan Cement, firm by 30 paisa on 1.135m shares and ICI Pakistan, up 85 paisa on 1.052m shares.

FUTURE CONTRACTS: Speculative issues also followed the lead of their ready counterparts and recovered strongly under the lead of Engro Chemical and PSO, which rose by Rs1.45 and Rs3.80 at Rs60.95 and Rs136.15 on 0.503m and 4.941m shares, respectively.