03 May 2004	Monday	12 Rabi-ul-Awwal 1425

After having received massive battering earlier in the week, Karachi stocks roared back to their pre-reaction levels as bulls were back in the market and made active short-covering at lower levels on all counters.

The KSE 100-share index managed to finish with a modest rise of 24 points at 5,430.72 as compared to previous 5,406.98 points. At one stage it moved as low as 5,300 points. That was a grand fight back and reflected that the correction phase was now far behind.

The weekend rally indicated that the index had not lost sight of its next target of 6,000 points. Analysts anticipated this possibility before the Budget in mid-June. Earlier there was panic, making widespread prunings at the highly inflated levels owing to last three months sustained run-up.

But some leading analysts predicted that the market would resume its upturn after the technical correction was overdone. "There was nothing to worry as all basic fundamentals point to a bull market at least until the next national budget", they said adding, "higher corporate announcements daily pouring in, new flotations and positive news from the economic front may not allow the leading bulls to stay idle".

There, however, were fears in some quarters about the results of Indian elections which could derail the current peace overtures in case the government over there changes.

The exit negative polls have already sent shock waves in the bourses here. This was witnessed by the highly volatile and sometimes violent price movements last week. There were also fears of a possible crash but good dividend played a positive role, analysts said.

"What worries long-term investors here are the reports that the ruling elite may not get the majority and a hung parliament may not be in the interest of Pakistan to carry through the current peace moves", they said.

But some others said the market had risen by 300 points during the last couple of months without looking back and taking a breather and the needed correction which came in the form of recent massive sell-off.

After having fallen sharply lower in mid-week, the trading managed to finish partly recovered and was last quoted at 5,335 points as compared to 5,406.98 a week earlier. The market capital also fell from the previous peak level of Rs1,455 billion to Rs1,430 billion over the week.

Decline was across the board and engulfed all sectors as everyone tried to cash in on at the available margins fearing the extension of the sell-off.Higher than the expected dividends by both the OGDC and the Fauji Fertiliser seem to have saved the situation, although future outlook still appears uncertain.

The big question being debated was whether or not the market will be back on rails. The index's early plunge of 138 points, however, had sent shock waves among investors and there were fears in some quarters that a virtual crash in an overbought had set in, unannounced.

But thanks to the above market expectations payout of 17.5 per cent and 32.5 per cent by the OGDC, Fertiliser giant Fauji Fertiliser, respectively halted the market's further decline allowing bulls to re-enter at the lower levels. The P/E of the former was Rs1.75 and that of the latter at Rs2.75, both had already paid the interim dividend.

The early sell-off was in part attributed to the prevailing turmoil on Indian financial markets including the bourses followed by reports that the Vajapayee government may not attain majority in national elections.

"The negative fallout of the report was visible in local trading amid fears that the tempo of current peace moves between the two neighbours may not continue owing to a change in Indian regime", analysts said.

However, good corporate results from two leading mega issues saved the situation, although they feared further prunings, in the sessions to come because of a long-weekend ahead. "I don't think there was any change in the corporate scenario", said a leading stock analyst commenting on the current turmoil on the bourses.

"The selling was inspired and initiated by big ones to push the prices lower and then to pick them up to adjust the portfolios". The Hub-Power, which had been under pressure for the last couple of sessions on reports of free float from some of its sponsors was back on rails and joined the rank of trend-setters.

Minus signs again dominated the list under the lead of some big MNCs, notably the Abbott Lab, Atlas Battery, Shell Gas, Siemens Pakistan, Arif Habib Securities and the Unilever Pakistan, which suffered heavily. The Indus Motors, Central Insurance, the IGI Insurance and several others in all sectors, barring cement which recovered from early lows, followed them.

All was not that bad on the broader market as some leading shares, notably the Clariant Pakistan, the Shell Pakistan, the Packages, the BOC Pakistan, the PNSC, the EFU Life Insurance and the Nestle MilkPak managed to finish higher and so did some other secondliners and blue chips.

Trading volume suffered a sharp setback as a section of investors held on to their positions rather than selling in panic amid hopes that the market would be back on rails after passing through a technical adjustment.

Some others also made active covering purchases at the falling prices amid predictions that the chances of capital gains in pre-budget trading sessions could be admirable in an expected renewed bull-run.

Speculative issues on the forward counter also followed lead of their counterpart in the ready section and fell from their current peak levels under the lead of the PSO, Hub-Power, Sui Southern, Sui Northern, the Engro Chemical, the MCB and Nishat Mills.