Despite a massive mid-week fall, stocks managed to finish modestly higher boosted by pre-budget short-covering on selected counters amid rumours of fiscal incentives.

Auto shares, for instance rose in unison followed by reports that the import of reconditioned cars as was widely speculated earlier may not be allowed in the budget, while on the other hand, Al-Ghazi Tractors fell as the president has announced the import of tractors on 10 per cent duty in his incentive package for the farmers.

Banking, fertiliser, insurance, and textile shares also rose amid market talk of incentives and so did some other sectors. But the mid-week terrorist attack on the convoy of the Karachi Corps commander and killing of 11 persons altogether changed the market's pre-budget outlook followed by panic selling.

"It is a serious development in the country's terrorist history as never before an army general was the target of an attack", analysts said adding, "the attack is multi-dimensional and could have serious impact on stock trading and investment climate in the days to come"

But some others think the market has the capacity and the will to absorb the negative fallout of the terrorist attacks as it has been doing for the last several months and will be on the rails on the strength of tax reliefs and incentives rumoured in the new budget.

Although the on-balance close was on the higher sides after erratic movement, the future direction of the market is still unclear and will essentially depend on the budget incentives and tax reliefs, brokers said.

There are, however, a lot long list of reliefs being aired by the press but investors are enthused by any one of them and are operating according to their own assessment of the prevailing situation.

After touching the week's peak level of 5,464.14 points on strong pre-budget speculative buying, the KSE 100-share finally finished around 5,384.48, modestly higher against the previous week's close of 5,363.00 points. The market capital on the other hand suffered a modest decline of about Rs2 billion at Rs1,447 billion.

The perception of peace, which the market badly needs at this moment still appears to be an elusive goal as the turmoil is there and it may not be that easy to tackle just in one administrative step, some dealers fear.

The general investor was, however, silent on the fallout of the recent negative developments and appears to have decided to follow the lead of "big one" rather treading alone on the course fraught with high risks.

The post-budget investor reaction to the fiscal measures could work on both sides of the market, although the market's future direction will be guided the incentives and tax reliefs to the corporate sector in the new budget, analysts said.

The resignation of the Sindh chief minister appears to be a non-event as investors generally followed the market's technical demands rather than the political events. However, it reflects that the government now means business in Sindh sans political consensus.

The new chief minister from the ruling party has taken over and how he tackles the law and order situation will have a positive impact on the trading in the months to come.

Each day reports from Islamabad about the fresh incentives and duty cut were pouring in but investors were not inclined to be carried away by just rumours. Rumours did have some influence on share business but they had no relevance to the "legendary budgetary leaks", coming from the well-informed sources within the ruling elite..

Gas shares were, however, an exception, which came in for active support as they have been allowed to increase rates from July 1,but on the other hand cement shares, which have assumed the role of trend-setters on higher exports and excise duty cut ran into profit-selling. Other pivotals, notably the National Bank came in for active support and rose further higher.

Al-Ghazi Tractors came in for active selling followed by rumours that the government may allow imports at a reduced duty rates but on the other hand, the Indus Motors and Pak-Suzuki Motors rose sharply on rumours that budget may remain silent on the issue of import of reconditioned cars.

There was no immediate either-way reaction to the resignation of the Sindh chief minister, it has certainly reinforced investor perception that the central government intends to restore peace in the commercial hub of Pakistan.

After opening higher, it reacted from early highs on active profit-selling in some of the pivotals and cement shares but late covering purchases at the lower levels, allowing it finish with an extended gain.

Prominent gainers were led by Haroon Oils, Merit Packaging, Pak-Suzuki Motors and Gatron Industries, Rafhan Maize Products, Treet Corporation, National Refinery, D.M. Textiles, Indus Motors, International Industries, Lakson Tobacco, Indus Dyeing, Babri Cotton and Lawrencepur Woollen followed them.

Losses on the other hand were fractional barring Javed Omer, which suffered sharp fall despite an interim dividend of 250 per cent or Rs.25 per share followed by Clariant Pakistan, Thal Industries, Fauji Fertiliser, Atlas Honda, Shell Pakistan, PSO, BOC Pakistan and Fazal Textiles.

FORWARD COUNTER: With the exception of a modest decline in the share of Hub-Power, all others actives finished with modest gains under the lead of Bank Alfalah, the PTCL, F.F. Bin Qasim Fertiliser, Pak PTA and some others amid alternate bouts of buying and selling.