A number of corrective and confidence-building steps taken by the Securities and Exchange Commission of Pakistan (SECP) to restore the investor-confidence in share business failed in leaving an immediate and positive. Analysts said that the feeble weekend rally had raised hopes that the worst may be over. Both the KSE 100-share index and the market capital also recovered from early lows and reflected that the institutional traders were around and may put an end to the protracted bearish spell by next week.
The situation, however, on the forward counter was not encouraging despite reports that the stand-off caused by certain delivery problems in the matured March contract was over. Sanity was expected to return on this counter after massive losses in leading energy shares.
Stocks fluctuated widely either-way as the mid-week snap rally failed to extend and the same investors who had launched rescue operation pulled out from the market after having taken profits at inflated levels.
The market’s future outlook appeared quite optimistic in the backdrop of the mid-week rally which was blurred by massive selling by those who had bailed it out from the delivery problems in forward March contract.
There was no bearish reason behind the sell-off but some analysts said that the investor-confidence had been badly shaken after the index fell by 30 per cent in mere two weeks. None is inclined to hold long positions even on blue chip counters as massive selling in oil shares, notably the PSO, the Shell Pakistan, the OGDC, the PPL, the Pakistan Oilfields and some others had taken the heat out from the market, at least for near-term.
The KSE 100-share index lost more than what it recovered during the last two sessions as rescue operation ended half-way after the exit of key players.
After rising early by 276 points, it finished the week with a sharp fall of 376.23 points at 7,598.87 as compared to 7,770.33 a week earlier. It moved either-way touching the highest at 8,300 and the lowest around 7,400 in line with the behaviour of leading base shares.
The market capital also suffered a massive loss of about Rs86 billion at Rs2,144 billion as all heavy weights, notably the PSO, the OGDC, the PTCL reacted with the same haste as they did on the rise.
In the backdrop of 30 per cent fall, the market was still in search of a viable level, a broker said adding that any index level between 6,000 and 7,000 could be an ideal meeting ground for both the bulls and the bears.
The consortium support was meant to bail out defaulting colleagues who were facing delivery problems in the future March contract, said an analyst while commenting on the market’s U-turn. He added that once the clearing business was done smoothly there would be no point in holding on to long positions and the consequent sell-off.
News from the economic front may by positive in the backdrop of seven per cent growth rate. The market responded to basic fundamentals, both positive and negative.
The index was still overvalued and may remain under pressure until it found the real and sustainable level, brokers said adding, but none appeared in a mood to take long-term positions at current levels thinking they were still overvalued.
What was more disturbing was the exit of leading financial institutions, which were supposed to support the market until prices stabilized at a certain level, analyst said.
It was but natural for general investors to follow them without any bearish reason as they too were in no mood to take the risks in market, tossing between the bad and the good news, he said.
He said the recent crash of the market had exposed the weaknesses in the current forward trading system which needed major change to ward off any future crash like the present one, most analysts said.
Although, losers dominated the list but some leading shares managed to finish with good gains under the lead of Gillette Pakistan, Pakistan Gum Chemicals, Berger paints, United Sugar, Suraj Cotton, New Jubilee Insurance, Central Insurance and Noon Pakistan.
The list was strewn with sharp losses on all counters. Energy sector was again on the target of sellers. Arif Habib Securities, Javed Omer, Lakson Tobacco, the PPL, Pakistan Oilfields, Colgate Pakistan, the AKD Securities, the PSO, Shell Pakistan, and Wyeth Pakistan were leading among them. Some other leading shares also fell like nine pins.
FORWARD COUNTER: Barring the OGDC, the PPL, the Pakistan Oilfields and the PTCL, which suffered sharp setback some others, notably the D.G. Khan Cement, the Fauji Fertiliser Bin Qasim, and else managed to put on good gains under the lead of the PSO which staged a smart recovery from the mid-week lows.—Muhammad Aslam
