May 5, 2003	Monday	Rabi-ul-Awwal 2, 1424

STOCKS last week recovered from the previous lower levels as leading investors covered positions at the lower levels on selected counters but financial support failed to figure prominently on any of the counters as was reflected by low daily volumes.

Financial support may not be drying up but its absence during the last couple of weeks has raised many questions among those who followed it to realize quick gains. Absence of supporting news from the corporate front may be one of the reasons behind their absence.

“Political standoff may not be brewing in the ruling elite after the resignation of Ch. Shujaat, known as the king maker from the official LFO committee,” some analysts think so. “It will be clear possibly by the next week what the move means in purely political terms.”

Some of the positive developments on the political front on the other hand, notably peace moves between Pakistan and India significantly influenced the trading enabling the KSE 100-share index again to breach through the barrier of 2,900 points, which finally stood firm at 2,924.57.

“The Indian prime minister may or may not accept his Pakistani counterpart’s invitation to visit Lahore because of some local compulsions, peace overtures have reinforced investor perceptions of smooth sailing beyond the index level of 3,000 point,” one analyst predicts.

A near-consensus developing on the hot political and constitutional issues among the contenders of power could give the needed push to the market if the current moves to settle the issues go through, he adds.

Some leading floor brokers also support this view. But said there could be a relative calm on the corporate front as far as the good news are concerned and the market has to rely on these two possible trend setters, settlement of the LFO issue and the peace talks with India. The market has already touched the crucial index level and indications are that it may continue its upward thrust but after due technical consolidation phases.

“The LFO-rally is sustainable if all goes well with the political perceptions of the contenders of power and together with positive response from India for talks, the market could witness a major breakthrough beyond the 3,000 index level not in a very distant future,” they said.

The index stood firm at 2,924.57, up 65.26 points or 3.5 per cent signalling that now it could hit its next target of 3,000 points if all goes well with the current initiatives on LFO and the normalization of relations with India. The market capitalization rose by Rs15 billion at Rs642bn as compared to Rs627bn a week earlier.

The buying euphoria was so strong that the market did not react bearishly to reports that the visiting Hague team has started inspection of FFC-Jordan Fertilizer company’s production facilities to “ascertain whether it is producing chemical weapons.”

The company produces urea and DPA fertilizer and belong to a well known Fauji Foundation, which owns a chain of industries including Fauji Fertilizer, one of the leading urea producers. The share value of FFC-Jordan rose by 30 paisa at Rs11.70 (face value Rs10) on over 3m shares.

“Investors are now focusing their attention on the internal and external political developments and their likely positive impact on the local stock market,” analysts said “any breakthrough on the LFO front in the backdrop of committee finding could give the needed push to the market.”

But the market could receive the major boost if the Indian prime minister accepts Pakistan’s invitation and decides to visit Lahore to resume bus diplomacy the market may witness boom-like conditions.

During the last couple of weeks, notably after the Iraq war, investors were generally guided by the encouraging corporate announcements from some of the leading companies but now they will readjust their priorities in line with the positive political developments both in Pakistan and outside.

“Good corporate announcements may dry up during the next couple of weeks and investors may look for some other stimulants to maintain the current tempo,” brokers said adding “most immediate among them could be from the political front.”

Active selling in the auto and energy shares at the fag-end of the week followed by reports that local assemblers have agreed to reduce prices from the next month weighed against the underlying sentiment and so did successive downward revision in petroleum prices.

Siemens Pakistan, which came out an interim dividend of 130 per cent was among the top gainers followed by Parke-Davis, which rose by Rs100. Other good gainers were led by Packages, New Jubilee Insurance, Gul Ahmed Textiles, Lawrencepur Woollen, PSO, IGI Insurance, Atlas Battery, Shell Pakistan, Nestle MilkPak, Millat Tractors, Clariant Pakistan and several others.

But largest gain was recorded in the share if Wyeth Pakistan, which together with Parke-Davis had risen by more than Rs150 against their face value of Rs10 owing to shortage of floating stock.

Treet Corporation and Unilever Pakistan led the list of losers, followed by Gatron, Nestle MilkPak, HinoPak, Indus and Pak-Suzuki Motors, Gatron Industries, Shafiq Textiles, Lakson Tobacco, Security Papers and Bhanero Textiles, although leading among them managed to recoup most of the earlier losses at the fag-end of the week.

Trading volume fell from an average billion share mark for the last couple of weeks to 652m shares partly because of May day closure and partly the absence of leading institutional traders.

Sui Northern Gas, PTCL, Hub-Power, Pak PTA, PIAC and PSO were leading among them followed by Bosicor Pakistan, Pakistan Oilfields, Telecard, Nishat Mills, FFC-Jordan Fertilizer, D.G. Khan Cement and KESC. LTV Capital Modaraba, an undervalued share also join the list of actives and traded higher apparently on the assumption of management change.

FORWARD COUNTER: With the exception of the PSO, which remained under pressure and fell from the previous peak level, all other speculative shares finished on-balance higher under the lead of Hub-Power, PTCL, Sui Northern Gas and Pak PTA and so did Nishat Mills and TRG Pakistan, which made its provisional debut at Rs12 and closed at Rs15.—Muhammad Aslam