THE stock market showed highly erratic price movements last week as investors played on both sides of the fence — taking profit at the rise and buying at the dips. However, none was inclined to hold long positions on any counter and played on the intra-day cards most of the time – the weekend considerations being one of the major concerns.
Leading shares managed to recover from mid-week lows followed by strong financial support in the massively battered oil shares at lower levels. However, future market direction still appeared a bit uncertain.
The weekend selling, once again put it in the reverse gear due to selling in some blue chips.
It was literally the OGDC week, which along with other low-priced oil shares, pulled the market out of the prevailing impasse with indications that it may play a rescuing role as it did by pulling down shutters on the rising market. This was owing to the settlement problems in its matured March contract on the forward counter.
The falling daily volumes - accent being on the liquidation side in the backdrop of last three weeks’ massive sell-off - signalled that the market may take some more weeks to draw itself from the nightmarish panic standoff.
The market had more than one reason to respond to its technical demands but the negative rumours, including a 10 per cent tax on the broker’s commission, followed in quick succession, never allowing the investors to plan a long-term buying strategy.
An idea of the prevailing uncertainty may well be had from the fact that even the leading investors and financial traders think twice before taking long positions in blue chips and risk-free shares.
However, there were indications that the worst may be over and now the process of recovery initiated by oil giants should take the entire market along with it in the coming weeks.
After, at one stage, hitting the week’s highest level of 8,050.25 points, the KSE 100-share index finally managed to finish with a modest recovery of 187 points, adding Rs46 billion to the market capital.
Hopes were raised for a robust recovery when the KSE 100-share index on the week’s opening session breached through five consecutive barriers at 8,050.25 points as compared to 7,596.87 at the last weekend, up 453.38 points or six per cent.
The final close was around 7,593.30 points, showing a fractional change of 3.57 over the previous week’s close of 7,596.89.
It was taken by investors as a signal that the market resumed its bullish cycle but chained by some strict official steps aimed at checking speculative activity by any quarter.
None could precisely tell what the perceptions was behind the snap run-up, analysts said, adding ”some feared that it could be deceptive and stayed away by allowing the financial institutions to play the game”.
“It was a grand rebound judged by any standard but general investors would play safe for next couple of sessions before making a comeback in the market”, some brokers said.
All roads again led to the OGDC, the PTCL, the PSO and the National Bank as they were active players in the last two week’s downward drift and again played a pivotal role in putting it back on the rails.
The biggest rise was noted in the PSO followed by the PTCL, the OGDC and the National Bank, followed by others, notably the cement, textiles and fertilizer sectors.
“Still, there may be some reservations on the part of some big operators but I think the worst may over”, said a leading analyst. “The rally could well prove a take-off point for a strong recovery”.
After having received massive battering during the last couple of weeks most of the trend-setters assumed attractively low levels and only fools may not ride the bandwagon in the presence of strong financial buying.
“Liberal margin financing by the banks to brokers aided in part as the revival of financial support was the chief inspiring factor in the current rebound”, one broker said adding ”some more corrective steps to restore sanity to stock trading will be additional supporting factors”
There was no trace of the last week’s panic as from the opening bell the leading financial institutions and institutional traders were in the market and extended massive support on selected counters and retailers followed them to realise quick gains.
Smart gains dominated the list under the lead of Arif Habib Securities, Javed Omer, Dawood Hercules, the PPL, Grays of Cambridge, the PSO and and Wyeth Pakistan.
They were followed by the Attock Refinery, the Atlas Honda, the Fauji Fertiliser, the Engro Chemical, the OGDC, and the Pakistan Oilfields. Many others also closed with smart rallies on strong support at lower prices.
Losers were led by the Quetta Textles, the Century Papers, and the Central Insurance, the Sapphire Textiles, the HinoPak Motors, the Nestle Milk Pak, the Gatron Industries, the Bhanero Textiles and some others.
FORWARD COUNTER: Speculative issues on the forward counter also followed the lead of their counterparts in the ready section and generally fell under the lead of the PTCL, the OGDC, the PPL and some others. But Pakistan Oilfields was an exception which rose sharply.—Muhammad Aslam
