October 20, 2003	Monday	Sha'aban 23, 1424

Stocks last week remained in a terribly bad mood as leading investors played safe in the absence of institutional traders. Retailers got a free hands to indulge on both sides of the fence without taking long positions on any of the counters.

A massive decline of Rs42 billion in the capital and 174 points in the KSE 100-share index reflect that the market retreat might continue to its logically sustainable level if the institutional traders decide otherwise.

The central bank has signalled that it intends to keep the interest rate stable at current levels. It rejected all offers for the Treasury bills on October 15, apparently in an effort to provide cheaper creditline to investors. However, the leading traders eyeing the Rs60 billion worth sale of the T.Bill retrieved the foreign creditline of $1.07 billion, and most of the time stayed away.

Retailers, short-term dealers and jobbers played on both sides of the fence just to keep the wheels moving rather than giving the market a needed direction.

The KSE 100-share index suffered a fresh decline of 174 points at 3,969 and so did the market capital at Rs862 billion as compared to Rs904 billion a week earlier, a massive fall of Rs42 billion over the week.

Predictions that the investors would be back in the market after having an overview of their inventories and would resume new account buying in a big way proved incorrect. The prodigal sons, financial traders and retailers just marked time amid falling trading volumes.

After having surpassed all previous records both in terms of index level and capital, the market is now directionless for about three weeks and the daily falling volumes equivalent to the total of active scrips like the PTCL and the Hub-Power signals the boom period may be over.

In the process the KSE 100-share index kept sliding and at one stage breached through the crucial barrier of 4,000 points. In one month it eroded about 600 points or 15 per cent and Rs150 billion massive erosions judged by any standard.

“Big ones played on both sides of the market making the final bidding date of the PSO as an attractive bait”, one analyst said and “made massive profits after spreading rumours about the delay and fixing of the final date”. A conflicting statement from the Privatisation Commission’s high-up over the date issue kept the market terribly volatile throughout the week.

Its share fell by Rs14 from the overnight highs followed by the minister for privatization’s statement that it may be sold to one of the short-listed strategic buyers after Eid. All leading shares were dragged down on the persistent selling, but there were no willing buyers even at falling prices.

The fall was widespread and massive, signalling the exit of big ones from the market after cashing in on the available margin of profits.

Other leading base shares, notably the PTCL and the Hub-Power, which together hold a weightage of 43 per cent in the index followed it triggering a lot of sympathetic selling on other blue chip counters.

“Steep decline in the index reflects that it is progressively losing its grip on the psychological barrier of 4,000 points”, analysts said , adding “the outflow of huge cash amounts for the National Bank and the OGDC shares may be one of the reasons behind the current sell-off”.

“The market is facing both the liquidity crunch and normal demand from all quarters”, some others say, “political standoff is also taking its toll in the form of long-term investment from the institutional traders”.

Sale of the National Bank shares, which opened for public subscription on October 13 for three days, may be affected too, owing to general slump in shares values as well as its counterpart in the ready section which fell below its minimum rate of Rs46 to 45.85.

On the top of it is an all-time increase in lint cotton prices which have soared to Rs3,870.30 per maund, a level never touched before. The weak textile sector, which accounts more than a half of the total listed companies could have a chain of negative factors on all industrial shares and in turn on exports.

“These appear to be long-term perceptions in the minds of investors who may have decided to got out as the share business may not be that attractive as it has been during the last couple of months”, said a leading broker.

Although, the minister of privatization announced an ambitious disinvestment programme of some mega state-owned units, including the Habib Bank and the OGDC, but the investors have pinned hopes on the sell-off of the PSO during the current month.

Further delay in the PSO’s final bidding date from March this year to December has raised many questions in investor mind about the official intentions in the backdrop of adverse press comments over the sell-off of a strategic and profitable state-owned unit.

All leading shares, notably the National Bank, the Pakistan Oilfields, the ICI Pakistan, the MCB, the T.R.G Pakistan, the ICP SEMF and most of the second-liners finished well below their circuit breakers.

Big losers were led by the PSO, the Shell Pakistan, the Grays of Cambridge, Javed Omer and the Unilever Pakistan, which suffered fall ranging from Rs12.95 to 45, followed by the Pakistan Refinery, the Lakson Tobacco, the IGI Insurance, Dawood Hercules, the National Refinery and the Pakistan Oilfields. The Unilever Pakistan and the Wyeth Pakistan also fell at the fag-end of the week.

Some leading synthetic, auto and textile shares managed to finish modestly higher but there were no big gains in any of the leading shares, although some of them recovered from the early lows.

Trading volumes failed to expand beyond the 200 million shares in the absence of massive activities in any of the volume leaders.

FORWARD COUNTER: Speculative issues on the forward counter received massive battering under the lead of the PSO, which fell by Rs35.05 at Rs261.80 followed selling prompted by the conflicting reports of its final bidding date.

Other leading shares including the Hub-Power and the PTCL also remained under pressure and fell sharply lower and so did the others. The Engro Chemical, the Fauji Fertiliser and the ICI Pakistan, however, managed to limit their fall on strong mid-week buying.—Muhammad Aslam.