November 3, 2003	Monday	Ramazan 7, 1424

Stocks during the previous week ran into deeper recessions as attempted bull rallies throughout the last week failed to get through in the absence of strong follow-up support from the financial institutions.

“The market appears to be a victim of slack support rather than large selling from any quarter,” analysts said adding “in the developing scenario the future outlook appears quite bleak and that too in the backdrop of higher corporate earnings.”

Pakistan’s acceptance of Indian confidence building proposals and higher corporate earning by some of the leading companies slowed down the recent downward drift on the Karachi bourse but analysts are divided over the future direction of the market.

The current Indian peace overtures may not ease the prevailing tensions between the two warring neighbours until there is some progress on the core issues, analysts said adding “Pakistan acceptance could hardly be a market factor.”

The KSE 100-share index suffered a fresh fall of 164 points at 3,781.39 as compared to 3,945.36 a week earlier. Market capital also fell from the previous peak level of Rs838bn to Rs803bn, showing a decline of Rs35bn.

The breach of two barriers, 3,800 and 3,700 in a week reflects that further correction is overdue and the index is still to find its realistic and sustainable level, one broker said.

However, the market is expected to respond positively to reports of higher earnings by a couple of leading companies including PTCL, National Bank, which reported 27 per cent and 98 per cent improvements in their interim working results and so did Muslim Commercial Bank (MCB) whose board announced a second interim dividend at the rate of 12.5 per cent,15 per cent first interim already paid.

There is a loud whispering in the market that a section of investors unloading their holding on some overvalued counters to have a stake in the newly listed Oil & Gas Development Company. Public subscription in its share will open from Nov 10 to 14 at an official price of Rs32.

During the last three sessions since its provisional listing about 20m shares have been sold on the open market at an average rate of Rs42, a premium of Rs10 over the official rate.

Reports that the PSO sell-off issue has been referred to the Economic Coordination Committee to sort out some of the contentious issues halting the fixation of final bidding date will certainly take away the speculative element from current trading pattern to save the smaller savers from the price manipulation of the big ones.

The step has perhaps been taken in the backdrop of protest by some of the leading investors seeking official intervention to end the speculative trading in its share for the last couple of weeks.

“The PSO issue has, in the recent past, assumed the role of a market trend setter as speculative forces allegedly manipulate it under the patronage of some highly informed one at the cost of retailers or the small savers,” analysts said.

Its share value has fallen to Rs247.50 on Oct 28 from Rs322 in early September under the cross-current of fixation of final date of bidding and subsequently the reports of delay.

“The issue needs official probe to pinpoint who is behind the tragic episode,” they said. “A perfect sound market known as the best performing forum in the world has been turned into a gambling den by a few.”

That was perhaps why official clarification about the delay failed to enthuse investors to resume their covering purchases and the downward drift continued, eroding another Rs13 from its share value.

“The market greeted the holy month with a terribly bearish frame of mind, although there was no change in the basic positive fundamentals both on the economic and political fronts,” commenting on the market’s steep decline without negative rumours.

“It was a total lack of support and the market was victim of it rather than any other negative news,” another said. “Bargain-hunters, retailers and financial institutions in unison stayed away.”

The physical activity remained relatively slow and analysts linked it to the advent of the holy month of Ramazan. As it has been the practice for the last several years, investors both belonging to bulls and bears mostly play safe causing a considerable decline in the daily volumes.

Although the echoes of cut in the list of companies eligible for carryover transactions to 30 from Dec 15, curtailed the traded volume in the shares to be removed, its major negative fallout was absorbed as Dec 15 is still too far, brokers said.

For the second week in a row volatility of the PSO amid rumours of its final bidding date again dominated the trading but unlike the overnight sessions’ massive either-way movement, the price movements were orderly, they said.

Official clarification about its sell-off and the announcement of the final bidding date to sell its controlling shares to one of the short-listed three bidders is expected to be announced after Eid.

“Final touches are being given to sort out the privatisation-related issues and once they are settled, final date will be announced,” commission officials said.

Despite official clarification about the delay in its sell-off, PSO share followed the previous trend and fell further despite late weekend recovery on active short-covering.

Energy shares led the market decline under the lead of Pakistan Oilfields, National Refinery and Shell Pakistan followed by other pivotals, notably Javed Omer, Bhanero Textiles, Clariant Pakistan, Parke-Davis, Unilever Pakistan and some others.

Some of the leading shares managed to put on good gains under the lead of Lakson Tobacco and Grays of Cambridge followed by Gatron Industries, UDL Modaraba, Century Insurance, Agri-Autos and PNSC and many others.

FORWARD COUNTER: After having received massive battering followed by conflicting rumours about its sell-off, PSO managed to finish partially recovered on late covering purchases followed by reports that its sell-off issue has been referred to the Economic Coordination Committee to sort out contentious issues. It recouped earlier losses and fell lower by Rs11.50.

PTCL and Hub-Power also followed it but losses were modest and so did most of the others barring FFC-Jordan Fertilizer, Fauji Fertilizer and Engro Chemical, which on balance managed to finish higher.—Muhammad Aslam