March 10, 2003	Monday	Muharram 6, 1424

The stocks last week recovered from their previous lows but finished well-below the week’s best level on selling at the fag-end of the week followed by President Bush ‘s threat to attack Iraq, irrespective of world opinion.

What worried investors’ was the US warning that it was now a matter of time, rather than any other hindrance, to go for a war despite opposition from China, Russia, Germany and France.

Initial run-up was aided by the positive dividend announcements, notably from the Hub-Power (33 per cent interim) and from some private sector banks, but it slowed down a bit on account of week end considerations and due to the looming Iraq war.

The KSE 100-share index showed a gain of 50 points at 2,448.65 points, adding Rs10 billion to market capitalization at Rs559 billion. Market lacked investor-enthusiasm which leads to bull market as fresh funds were not being injected because of the lower badla rates, and the absence of big players, including financial institutions.

The perception that the current steep decline in yields on Treasury bills from 3.1 to 2.1 per cent could cause a massive outflow from share business as above 15 per cent return, holds good. But that was matter of speculation at this stage.

Opposition’s uproar, on the LFO-amended constitution in the National Assembly on Wednesday, signalled that proceedings on political front may not be as smooth as could have been planned by the ruling elite, analysts feared.

“In Pakistan’s political history, the parliament had never been compliant and the present one could be more noisy owing to its relative strength and the government’s slander majority”, they added.

The looming war clouds on Iraq together with the heating up of local political scenario were likely to send bearish signals among investors and a continued lack of support and fresh selling by retailers, they said.

Buoyancy was more pronounced on the forward counter where some leading shares breached through the circuit-breakers under the lead of the PSO, which recovered after passing through a mid-week correction.

In market parlance, investors generally returned to ready and forward counters after badla rates fell below 10 per cent, as the bait of higher capital gains in speculative run were certain. The return of a bull market was reflected in the dizzy rise of 70 points in share index, which breached through the barriers of 2,400 and 2,500 points to end fully recovered. Its meteoric rises showed that it was heading towards the pre-reaction level of 2,954 points on the strength of strong institutional buying and low badla rates.

Analysts said massive idle money was floating here and there, after a record decline in badla rates (carryover transactions), indicating it may be ploughed back in shares to generate heat in the market.

“Essentially, it appeared the Hub-Power week as all roads were leading to it at current lower levels”, analysts said adding “after over a month of bear dominance investors welcomed the return of bulls with a bang”.

But some leading brokers were unsure whether or not the run-up could be sustained in the backdrop of changing Iraq war scenario and its likely impact on world bourses and foreign trade.

Technically, the market was now in a highly oversold position, notably on the blue chip counters and could attract any amount of covering purchases but much will depend on the political and Iraq fronts.

“No one will disagree with the fact that cash-heavy financial institutions were inclined to keep the inter-market flow of money at a high pitch and the current price levels provide an attractive bait”, market sources said.

The market earlier, was rife with rumours that the interim dividend could be between 30 to 35 per cent based possibly on its half yearly earnings and its previous dividend records. An interim dividend of 33 per cent by the Hub-Power was on the higher side of expectations.

The PSO followed it on strong institutional buying at lower levels as the sell-off date was drawing nearer. It had already received massive battering during the current sell-off and had reached fairly lower levels for any future investment.

Top gainers were led by the energy sector, notably Pakistan Oilfields, the PSO, Unilever Pakistan, Wyeth Pakistan and Shell Pakistan, followed by some others including the Lakson Tobacco, National Refinery, Pakistan Refinery, Cherat Papers, Dawood Hercules, Fauji Fertiliser, Engro Chemical and several others.

But at fag-end of the week most of the energy shares came in for active selling amid fears of war and finished with clipped gains under the lead of the PSO and the Shell Pakistan.

Losers included most of the second liners, notably Noon Sugar, Din Textiles, the EFU General Insurance, Tri-Pack Films, Bolan Casting, Attock Refinery, Honda Atlas, Abbott Lab and several others.

Trading volume showed a modest rise at 634 million shares from the previous 451 million shares but there were no massive activities in any of the current favourites barring the Hub-Power and the FFC-Jordan Fertiliser.

Other actives were led by the PSO, Engro Chemical Sui Northern Gas, Pakistan Oilfields, Bosicor Pakistan, the ICI Pakistan, the Pak PTA, Telecard, the MCB and some others.

FORWARD COUNTER: After early price flare-up aided by the Hub-Power interim dividend, the close was on the lower side as the PSO came in for active selling and led the decline. The Hub-Power, the PTCL and Sui Northern also fell but Engro Chemical managed to post a modest rise on active support at the mid-week lower level.—Muhammad Aslam