Bourses flutter to welcome their choice of Premier
By Muhammad Aslam
Heavy buying at the end of week put bourses back on the rails. Analysts predict that it could be a beginning of a big turnaround to welcome the new prime minister in coming sessions.
There could be many ifs and buts about the future market trend but one thing appears certain that Shaukat Aziz as the Prime Minister may not like the reversal of current boom conditions on the bourses.
He could go to any length to boost the trading after giving fresh incentives to investors. And that perception seems to have triggered fresh buy stops even at the weekend session, which generally meant profit-taking for jobbers and weak holders.
Earlier stocks remained unsettled as investors were not inclined to take long positions on any counter in the absence of strong institutional buying. Election of the new Prime Minister did cause flutters here and their at the fag-end of the week but market lacked aggressiveness associated with a bull run.
The market's uneven performance was also well-reflected in erratic movement of the KSE 100-share index, which failed to maintain its coveted level of 5,400 points and recovered to finish improved after hitting the week's lowest level of 5,355. It finally finished around 5,394.00,off 15.11 points.
Extension of the rally reflects that sailing during the coming weeks could be fairly smooth sans some inhibiting factors on law and order front. "The market has too much at stake", if Shaukat Aziz could not maintain his previous record or fails to announce fresh incentives, there could be disappointments in the market", some brokers fear.
Nevertheless, the general perception that once at the top slot he could deliver more than anyone can. "An air of optimism therefore, prevailed and the next week's trading will reflect how the market welcomed his election", they said.
However, the mid-week dividend announced by some leading companies, notably the Pakistan Petroleum, which came out with a final dividend of 25 per cent in addition to an interim of 20 per cent already paid, and 20 per cent of the Bank of Punjab reversed the early trend.
The dividend-driven rally is expected to be further extended during next week as dividend announcements from some leading companies are due. Investors may take fresh positions in anticipation of fresh incentives for stock traders.
"I foresee better days for the investing public after the new prime minister settles down", a leading stock analyst predicted" adding", his association with the bourses may not be based on love and hate as investors expect some more investment-friendly moves".
But some are not happy over his last fiscal measure of imposing the Capital Value Tax (CVT) at the rate of 0.01 per cent and its negative fallout on the daily business since then.
"The single-session turnover figure shrank from an average of 400 million shares to 150 million shares since the budget and a good number of day traders are still scared to enter into the market", some others said.
He may not give a waiver on the CVT but could announce fresh incentive to compensate the allied losses suffered by the investors, they added. The underlying sentiment early in part was also influenced bearishly followed by the reports of arrest of some of the terrorists who planned to attack the GHQ and the Parliament House a couple of days back.
But a leading analyst attributed the sluggishness just in the backdrop of last Friday's sustained run-up to an investment of Rs28 billion in the carryover market and allied fears including heavy selling at any time.
Floor brokers said an interim cash dividend of Rs55 per share despite 25 per cent fall in profits owing to tough competition by the Unilever Pakistan is in line with the market expectations, although most of them are worried over the next half year's earnings. The EPS on a 50-rupee share is Rs48.40.
" I don't foresee any major change in the future market trend", predicted a leading analyst". There could be snap flutters here and there after the National Bank and the MCB board meeting on August 30, and expectations of higher dividend but overall trend may remain dull".
Bulk of the support remained confined to the cement and energy sectors where potential of capital gains still exits partly on the reports of higher earnings and partly to some fresh positive developments on both counters.
"The official whispering about building a new dam could give the needed push to cement shares and the inventory gains netted by oil companies because of steep increase in world crude oil prices", brokers said.
Among leading gainers, the National Refinery and the Glaxo-SKF, which rose. They were followed by the Rafhan Maize, Sitara Chemicals, Pakistan Refinery, Pakistan Engineering, Thal, and the Colgate Pakistan.
But leading among them were the Zaman Textiles, Atlas Honda, Pakistan Cables, National Refinery, the ICI Pakistan and many others. Losses on the other hand were fractional barring the International Industries, Mari Gas, Rafhan Maize, Pakistan Services, the IGI Insurance, Avent is and many others.
FORWARD COUNTER: Speculative issues on the forward counter, however, failed to recover from the early lows and ended lower under the lead of the Pakistan Petroleum, the PTCL, the OGDC, the Hub-Power and the PSO but a good part of initial losses were recovered owing to weekend rally.
