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| August 8, 2005 | Monday | Rajab 2, 1426 |
Investors await SECP move for reform package
THE stocks recovered on active short-covering at lower levels in an oversold market, last week. This was triggered by the positive COT reports in the light of Shaukat Tarin Committee’s recommendations.
The chief stimulant to rope in the investors was based on the hopes that their liquidity problems will end once the SECP announced its modified reform package. This will aid in pulling the market out of its current sluggishness.
The market witnessed brief negative fallout on the findings of the Task Force about the crash in March naming some big players. The market next day ignored the findings, for obvious reasons.
The mid-week trading experienced a bull market on positive outcome of the COT issue and end of the double margin financing. The investors were lured back into the ring on bigger scale.
Both, the KSE 100-share index and the market capital rose from their recent lows as leading base shares came in for strong short-covering at an attractively lower level under the lead of the PTCL, the OGDC, the PSO, the Pakistan Petroleum, the Pakistan Oilfields and several others.
The index, as a result, broke through three barriers, although late selling pulled it down from the week’s peak level of 7,458.61 points. It was last quoted at around 7,418.61 and the capital at Rs2,106 billion from Rs2,045 billion. The net rise in both was 240 points and Rs61 billion, respectively.
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At the fag-end of the week came findings of the Task Force which was set up to probe the market crash in March when the index had fallen from 10,704 to 7,000 points and at one point below it, stripping small savers of billions.
The mid-week run-up was temporarily halted as the report contained names of some big shots that were behind the plunge leading to the unprecedented decline.
But analysts have said that this appeared to be a psychological factor trigging a sell-off. The market will be back on rails as most of the fundamentals were positive sans the lingering COT or badla issue. The talk of Continues Fund Supply (CFS) was rumoured to be replaced.
The market took a pause as the report contained on big names who reportedly had manipulated the market, shattering the confidence of foreign and local investors.
What action the government takes against such manipulators could have a negative impact in coming sessions, irrespective of the COT issue settlement.
The stocks, therefore, extended an early run-up on renewed buying at an attractive lower level on expectations that the Committee’s recommendations may get an official nod, settling once for all the dust of badla issue.
In the last couple of weeks, prices had fallen to low levels in an already oversold market and positive signals about the current issues lured back the investors while some made extensive buying on selected counters.
The market’s last two sessions’ performance reflected that any positive news could give it an instant boost in more than one ways, notably by restoring the investor-confidence. It had risen by well over 200 points or three per cent and demonstrated that an outside interference could mar or make the index as those who were manning it were supposed to be very powerful with strong financial base.
Rope them within the official code of ethics but without shaking the interest of small investor which could lead to the flight of capital from the market to other channels, brokers said.
The major irritant was the liquidity problem owing to the dust raised on badla issue and the rigid positions taken by its contenders, analysts said adding, the government may not be in a mood to allow the continuation of badla system of financing but compulsions of the situation point otherwise.
That may not be the end of the road if badla system of financing was allowed beyond August 26, some others said adding, let the dust settle down on the issue and them allow long rope of relevant laws to prevail.
The market may not be facing the liquidity crunch but it was made to look so, they said. There was massive money floating here and there in search of profitable avenues. Let it find its way into the share business after restoring its respectability.
Plus signs again dominated the list under the lead of Shell Pakistan on maintained cash dividend of 350 per cent plus bonus shares of 25 per cent and Bhanero Textiles. Other good gainers included Adamjee Insurance, the ICI Pakistan, the IGI Insurance, Attock Petroleum, and Packages.
Losses on the other hand were mostly fractional barring the Treet Corporation, Unilever Pakistan, Mari Gas, Lakson Tobacco, the AKD Securities, Island Textiles, and Javed Omer which fell sharply lower on active selling.
FORWARD COUNTER: Speculative shares also recovered from the previous lows under the lead of the PTCL, the OGDC, Pakistan Petroleum, National Bank, Fauji Fertiliser Bin Qasim and some others on active support at previous levels.—Muhammad Aslam
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