February 3, 2003	Monday	Zilhaj 1,1423

Negative external factors, notably the Iraq situation and the regional tensions dominated the trading on the stock market during the last week as investors were not inclined to take long positions, and mostly indulged in jobbing to avert undue losses.

The leading shares, including Hub-Power, PSO, Shell Pakistan, Engro Chemical, Fauji Fertilizer and many others, turned into a highly volatile performance as investors played on both sides of the fence, what the dealers called, post-dividend sell-off.

The underlying sentiment in the ready section was also influenced by heavy selling on the forward counter where pivotals such as the Fauji Fertilizer, the PSO and the Engro Chemical breached through their lower circuit-breakers for more than once on heavy selling.

Strong weekend selling, which pulled the KSE 100-share index down by 104 points at 2,545.07, virtually erased the earlier gains and hopes of a recovery. It ended off 64.38 points at 2,545.07 after at one stage touching the week’s peak level at 2,747.00.

The KSE 100-share index finally finished lower by 64.38 points at 2,545.45 eroding Rs13.089 billion from the market capitalization at Rs561.777 billion.

But it is pretty difficult to predict about the future direction of the market as the fall of the global stock and financial markets, fears of the US attack on Iraq and the regional tensions are taking steam out of the buying euphoria and investors are in two minds and could not decide how to react to the developing situation.

A record rise of 137.40 points or 5.23 per cent in the KSE 100-share index at the week’s opening session has raised hopes that the technical correction is overdone and bulls are well-in- command of the situation. But the following two sessions, a lot of fresh selling triggered by the Iraq situation and the negative news from across the border.

Higher dividend, notably by the Engro Chemical, the Fauji Fertilizer and the Unilever Pakistan at 75 per cent cash, 10 per cent bonus shares, 90 per cent cash and 276 per cent cash, respectively, did bring investors back, although their buying enthusiasm was significantly curbed by the SECP warning.

The Securities & Exchange Commission of Pakistan (SECP) has warned the brokers not to cross their exposure limits as some of them reportedly did a week earlier in a bid to restore sanity tothe stock trading signalled the official action they played within the specified rules.

The mid-week return of a bull regime is also well-reflected in a massive rise of Rs29 billion in the market capitalization, which soared to Rs604 billion from the last week’s low of Rs575 billion, reflecting the investor future perceptions about the share business.

The low-priced energy shares, notably the Shell Pakistan after the announcement of a higher interim dividend of 95 per cent and blue chips on the other counters, were some of the other aiding factors, and some of them finished above their circuit-breakers in the both ready and forward counters.

Although still lower by 100 points below its best level of 2,955 points established two weeks back, it breached through its psychological barrier of 2,700 points at 2,746.85, earlier in the week.

Normal settlement of the massive carryover business of about Rs15 billion and the consequent fall in badla rates (carryover charges) to an average normal range of 11 to 12 per cent from the previous 50 per cent, has given the needed push to the bulls to strike back, analysts said.

As the fears of default by some of the brokers who had allegedly played beyond their exposure limits two week ago were allayed after the clearing of carryover business, bulls re- entered the market with a bang to cover their short positions at the lower levels.

“There was an avalanche of buystops but no matching selling from any quarter,” they said, adding “the institutional led rally was so strong that bears withdrew to the sidelines to sell at the further higher levels.”

The last week’s persistent selling, which had pushed the KSE 100-share index by 345 points, had made the ruling prices of blue chips fairly attractive, and the bulls could hardly miss the charm of capital gains.

“Bears may not be licking their wounds witnessing their sudden rout from the sidelines, there was a scare among them all around,” brokers said, adding “some of them even indulged in hasty selling joining the select band of the leading bulls.”

“Some worries that the Iraq situation is there,” says a leading analyst, “but I don’t think it could pose an immediate threat to the grand return of a bull market.”

An impressive interim dividend at the rate of 95 per cent by Shell Pakistan, not only pushed its share value higher, but also triggered heavy covering purchases in the other leading energy shares, notably the PSO and some others.

The PSO and the Shell Pakistan, led the market decline followed by the Pakistan Refinery, the Pakistan Oilfields and the Unilever Pakistan. Others, including the 4th ICP, the Javed Omer, the Mari Gas, the Al-Ghazi Tractors, the Indus and the Pak-Suzuki Motors, the Abbott Lab, the Engro Chemical, the Fauji Fertilizer, the ICI Pakistan Glaxo-Wellcome, the BOC Pakistan and many others also fell sharply.

Losers were led by the Sapphire Textiles, the Lawrencepur Woollen and the Mitchell’s Fruits, the Kohinoor Weaving, the Faisal Spinning and the EFU Life. Other pivotals, which encountered mid-week profit-selling also ended lower owing to weekend selling.

Some of the leading shares managed to finish modestly higher on active support at the dips, but their on-balance closing was not that impressive.

Trading volume suffered a sharp contraction owing to absence of the leading financial institutions and fell sharply to 1.370 million shares as compared to 1.927 billion shares a week earlier.

The Hub-Power and the PTCL again proved the leading volume leaders followed by the PSO, the FFC-Jordan Fertilizer, on reports that the Fauji Fertilizer is taking stake in it, the Fauji Fertilizer, the Engro Chemical, the National Bank, the Sui Northern Gas, the ICI Pakistan, the KESC, the Pakistan PTA, the Pakistan Oilfields and many others.

— Muhammad Aslam