October 14, 2002	Monday	Sha'aban 7, 1423

The stocks fell like a house of cards during the post-election session on panic-selling originating from all quarters amid fears of political polarization on the fears of political instability.

The overall trend remained on higher side as the index managed to hold on to most of the gains netted in the pre-polls buying euphoria. The KSE index was traded off after hitting the peak level of 2,100 points during the pre-election sessions.

Investors seem to be worried over the talk of a hung parliament, the political instability, the continuation of current economic policies, and the withdrawal of foreign investment.

But some leading analysts hoped things would be normal after the investors had second thought on the post-election scenario and the official election results, indicating the party positions.

However, next week could be crucial for future direction of the market as the fears of a showdown among political parties in the backdrop of a hung parliament would continue to have negative impact on stock trading.

The pre-election speculative run-up did raise hopes of a stable political government, but initial results are contrary to investor-perceptions and this would certainly have its toll in the form of further price erosions in coming sessions too, at least until the new political government was placed and the power transferred.

Despite the massive post-election battering on panic-selling caused by an unexpected election results, the Karachi stocks managed to finish on-balance steady last week but the future outlook appears a bit uncertain at least for near-term.

The KSE 100-share index, which has soared to three-year peak level of 2,100 points — having risen about 70 points or five per cent thus pushing the market capitalization to Rs480 billion — reacted sharply during the post-election panic selling over the board.

Analysts are now divided over its future direction as leading among them term the current rise above the 2,000-point level as artificial which is not backed by basic fundamentals and a further erosion below the 1,900-point level is overdue.

But they ruled out the possibility of fresh panic-selling as party positions would be clear after the market reopens next Monday, and that would guide its future direction despite fears of confrontation between the pro and the anti-American policy exponents.

“The initial reaction to post-election political scenario was terribly bad”, one broker said adding, “the results are still pouring in and could change the overall party position after the final figures turn up”.

However, it was widely feared that the sailing on political front may not be that smooth as the anti-government or the anti-American parities, notably religious ones are destined to have a bigger say in political decisions.

That perhaps was why the investors, notably foreign funds, tried to get out of the market at least for near-term until the clear picture on the political front emerges.

The leading stock analysts, however, did not toe the line of reaction and hoped there were more than one ways to go for political compromises by both sides, and it will be around after the election enthusiasm fades.

The future market trend will be largely guided by the under-current of political developments, notably the co-existence between the contenders of power and their national outlook.

The initial reaction to election results showed anti-government parties leading the alleged “King’s Party” in terms of political gains, but much would depend on President Musharraf’s attitude to the developing phenomenon.

But some leading investors think if financial institutions decide to keep the market in a good shape, there was no reason to believe that the post-election political scenario could be too bad.

Much, however, would depend on the behaviour of foreign investors as to whether they choose to stay in the market holding on to their positions, or opt for quick exit, leav-ing behind a long list of casualties.

Bulk of the post-election selling was confined to high-profile pivotals including the PSO, the Engro Chemical, the PTCL, the Hub-Power, Adamjee Insurance and many others, which are capable of setting trend for the market to follow.

Trading volume rose to 610 million shares from the previous 601 million shares despite Thursday being a public holiday on account of the national elections, thanks to strong pre-election speculative buying in most of the pivotal under the “undisclosed trading system”, introduced from this week.

The Hub-Power, the PTCL, the PSO, the Engro Chemical, the ICI Pakistan, the Sui Northern were leading among the volume leaders followed by the MCB, the FFC-Jordan Fertiliser, the KESC, the Pak PTA, the National Bank, the Fauji Fertilizer, the D.G.Khan Cement, the Maple Leaf Cement, Adamjee Insurance, the Telecard, the Dewan Salman and several others.

FORWARD COUNTER: Speculative issues on the forward counter also followed the lead of their counterpart in ready section and witnessed a lot of profit-selling in the post-election session and fell under the lead of the PSO, the Engro Chemical, although the overall closing was on the upper side.—Muhammad Aslam