April 7, 2003	Monday	Safar 4, 1424

After moving either-way during the last week, stocks managed to give a relatively improved performance at the weekend session enabling the index to finish with a modest rise as leading bases shares came in for active short-covering.

The PSO led the market advance followed by reports that the scheduled date of April 26 for its sell-off will be adhered to discounting rumours of postponement. Other pivotals also followed its lead under the lead of Hub-Power in anticipation of higher final dividend.

The notable feature of the week was that the total market capitalization again breached through the barrier of Rs600 billion at Rs603 billion, indicating that it may breach possibly by the next week its previous all-time peak of Rs610 billion.

The market, therefore, performed credibly well thanks to some positive developments as cash heavy financial institutions were not inclined to leave the arena discounting immediate negative impact of Iraq war on the economy or change in the US policy in regard to nuclear technology and its alleged transfer to North Korea.

But what it did not digest that easily was the Indian threat of pre-emptive attack to stop the alleged cross-border terrorism in Kashmir. The threat caused quite a mess in the trading pattern.

However, financial traders were not inclined to keep out as fresh fall in yield on T-bills to 1.75 per cent from the previous two per cent has all together changed their investment perceptions and limited manoeuvring of massive surplus funds.

“We will stay in the market until we explore other modes of gainful investment as attractive as the share business is now,” says a leading banker, adding “but there is none at least for the moment.”

But all was not smooth on the floor as negative external factor did generate a lot of profit-selling on the bluechip counters, although the gaps were quickly filled in by the institutional traders.

Apart from conflicting reports from the Iraq war front, reports of extension of the US sanctions on Kahuta Research Labs for another two years and the Kashmore tribal clash killing over two dozen persons also worked against the underlying sentiment.

After early moving either-way, the KSE 100-share index managed to put on a fresh gain of 34.45 points at 2,778.63, signalling that it could breach through the next barrier by the next week. The market capitalization swelled to Rs603 billion close to all- time peak level of Rs610 billion attained last year.

But profit-selling did not at any stage assumed an alarming proportions and was well-absorbed at the dips amid growing confidence about the market’s inherent strength and its capacity to absorb technical bear shocks. Bulk of the selling was confined to overvalued energy shares, notably the PSO and the Shell Pakistan, while insurance sector again performed well despite higher dividend by some of the leading shares for the year ended December 31, 2002.

“The sanctions will not have any major negative impact on the economy but the timing was not that ideal,” analysts said, adding “Pakistan has already gone out of way to support the US war on terrorism.”

“It appears to be a warning signal against Pakistan stance on the US war effort in Iraq,” some others speculate. “Investors may have correctly taken the message and hastened to liquidate long position but no matching covering purchases.”

After having risen by five per cent during the last week, the KSE 100-share index gave in erratic movements following the course of external news, but finally managed to finish higher above the previous close.

Some others say conflicting reports from the Iraq war front are not that encouraging to fuel the last week’s run-up as reports of “a pause” in the allied forces’ advance worked against the bull perceptions of the market.

“I don’t think financial institutions could pull out of the market for a long period as of late investment trends have gone a significant changes,” brokers said and added, “in the similar conditions as the prevailing one, there is no other attractive bait as the share business.”

Over the last couple of months the discount rate has fallen to 7.5 per cent and interest yield on Pakistan Investment Bonds to 1.75 per cent from the previous four per cent and this phenomenon has limited the investment options for the big ones but stocks provide them an attractive bait, they add.

However, hopes that meeting of the newly formed Privatization Commission on April 7, could give the final signal for the PSO sell-off as scheduled for April 26 is expected to generate a lot of activity in its share and some other energy scrips.

Although alternate bouts of buying and selling was the hallmark of the trading, most high-yield stocks, notably the Hub- Power and the PTCL and some others managed to finish with an extended gain, major gainers among them being the Javed Omer, the Habib Insurance, the Lakson Tobacco, the Rafhan Maize, the Glaxo- Wellcome and the Bhanero Textiles, the Nestle MilkPak, the Dawood Hercules, the Millat Tractors, the Crescent Leasing, the Alico, the EFU General Insurance in response to higher dividend plus bonus shares and, the Unilever Pakistan and some others finished with good gains amid active trading.

Losers were led by the PSO and the Shell Pakistan followed by the Faisal Spinning, the Attock Refinery, the Engro Chemical and the Fauji Fertiliser, the National Refinery and some others.

FORWARD COUNTER: Speculative issues on the forward counter mostly followed the lead of their counterparts in the ready section, although final close was a bit improved. Bulk of the buying remained centred in the Hub-Power ahead of its board meeting followed by the PSO, the PTCL, the Sui Northern and the Engro Chemical after the settlement of hostile takeover issue by another fertilizer giant whose directors had cornered about 27 per cent of its shares from the open market.

Trading volume swelled to over a billion shares after several months, bulk of which went to the credit of the Hub-Power, the PTCL, the PSO, the Sui Northern, the Engro Chemical, the Fauji Fertilizer and the FFC-Jordan Fertiliser.—Muhammad Aslam