General investors still in two minds, stay on the sidelines
THE weekend strong rally initiated by the PTCL and some other leading base shares gave a pleasant surprise to even most well-informed stocks analysts but if the market talk of some relief in badla financing on certain selected scrips is true, the current run-up could be sustained as the heavy-weights have joined the bandwagon.
Earlier, however, stocks again turned in a highly volatile performance during the preceding week as investors were not inclined to take long positions even at the falling prices on the blue chip counters.
However, weekend’s smart rally has raised hopes that if the current tempo of recovery could be maintained next week also, most of the leading shares still provide an attractive bait of capital appreciation.
The market’s erratic movements are also well-reflected in the KSE 100-share index, which moved within the wide range of 300 points either-way finally managing to finish around the previous week levels.
It has risen sharply higher but leading base shares— PTCL, OGDC, PPL and some others— remained under persistent pressure in the absence of support at the lower levels, keeping the index terribly volatile. It finally finished around 7,512.91 points after earlier having fallen to a low of 6,900 points. The net fall over the week was around 80 points.
The market capital also behaved in the same fashion and finished around Rs2,078 billion after having hit the lowest and the highest for the week amid erratic movements.
Some of the second-liners came to the rescue of the blue chip counter and showed in more than one ways their relative strength that they could push the index higher sans the big weights including PTCL, PPL, OGDC and some others.
Although leading analysts predict that the worst may be over now and the market has no other option but to meet its technical demands being in a highly oversold state but are awaiting the return of the prodigal son.
Some of the leading financial institutions and banks have already resumed their buying operations though on a modest scale but general investor is still in two minds and is keeping on the sidelines and watches the proceeding from the outside.
Foreign buying, which was quite formidable on a number of counters prior to the massive retreat are also conspicuous by their absence. The low daily turnover figure tells that investors are still in two minds about riding the bandwagon and may take some more weeks to fully recover the shock of a retreating market.
But after mid-week, the market seems to have absorbed the likely negative fallout of 1.5 per cent increase in the discount rate at nine percent from the previous 7.5 per cent after over two years by the central bank on Tuesday as investors flooded the market with fresh buying orders at the lower levels.
“Investors appear to have encouraged to cover positions at the lower rates as there was no indication of rate hike by any of them to their customers in line with the state bank move”, an analyst said .‘Banks will think twice to follow the central bank as they have their own clientele limitations”, said another.
All the leading base shares, notably OGDC, Pakistan Oilfields and PSO participated in the run-up under the lead of PTCL, which was massive traded on market talk of its early sell-off.
However there is no strong financial fundamental behind the snap rally just in the backdrop of overnight massive fall but technical factors seemed to have worked in support of the market.
“The market needs only fresh investment of Rs10 billion to put back on the rails”, says a leading floor broker adding, ”there is a lot of floating money around and someone must rope it in” financial traders extend helping them in their effort to save small investors from fresh losses”.
Bulk of the support remained confined to the low-priced leading banks shares followed by fertiliser, textile, cement and leading insurance shares, while mutual funds were leasing shares, and others showed mixed trend.
Pakistan Oilfields and Wyeth Pakistan , which rose by Rs19.70 and Rs49 were leading among the gainers, while losers were led by National Refinery and Unilever Pakistan.
Other leading gainers included Arif Habib Securities, EFU General, Javed Omer, Attock Refinery, Pakistan Refinery, PSO, Shell Pakistan, Fauji Fertiliser National Bank, Askari Bank, Al-Ghazi Tractors, Unilever Pakistan, Indus Motors and several others.
Prominent losers were led by Artistic Denim, Treet Corporation, Grays of Cambridge, Atlas Honda, Mehmood Textiles, PPL, OGDC. Attock Petroleum and some other energy and textile shares.
FORWARD COUNTER: Late short-covering in most of the pivotals followed by reports of some relief on the badla financing allowed the leading energy shares to finish above the earlier lows. PTCL, OGDC,PPL, KAPCO, Fauji Fertiliser Bin Qasim and many others also finished partially recovered on active buying at the lower levels.—Mohammad Aslam
