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THE week-end snap rally raised the hopes that worst may be over as consolidations forces were back in the market and resumed their covering operations at an attractively low level.
Although the market still has to go a long way to rise to its pre-reaction levels but the SECP chief’s resignation rumours seemed to have sent a wave of optimism which was reflected by the strong covering purchases in a highly oversold market.
The market recovery was headed by leading oil shares as they took with them the entire market to new lows but some analysts still doubt whether or not the snap rally would extend farther in the next week.
The stocks, last week, finished on a terribly bad note but well above the lows - thanks to late covering purchases in oil shares at the week-end, although earlier negative news followed in quick successions not letting the investors think of a retreat.
The chief destabilizing factor behind the renewed sell-off which eroded well over 500 points or 6.5 per cent from the index and Rs120 billion from the capital was said to be the standoff on the COT issue and some other irritants.
The KSE 100-share index was last quoted at 7,150.65 points as compared to 7,418.61 a week earlier, off 267.96 points as all leading base shares suffered sharp losses. The market capital also fell by Rs72 billion.
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Analysts said the mid-week breach of psychological barrier of 7,000 was significant as it pointed towards fresh consolidation at around 6,500 points but it may not be free-for-all as buying support could re-emerge below this level.
The investors were expecting some positive decision on the Shaukat Tarin Committee’s recommendation to pull the market out of the current sluggishness. But there was no official word on the issue till the end.
The prevailing uncertainty and allied matters relating to the liquidity problems forced the investors and brokers to liquidate long positions on high profile issues just to keep the wheels moving though on lower side.
Moreover, the market remained in a tight grip of rumour mongers who tilted in their favour, the price balance after spreading negative words in each session which also included that the Etisalat had failed in lining up the fund for final bid. This pushed the PTCL shares down from Rs64 to 60.
Clarification from the buyer came late as the damage was already done in the falling market. The Etisalat had announced of raising $2.14 billion from a consortium of seven foreign banks and appointment of the lead arrangers. Further decline in its share value was halted after the clarification.
The stocks, therefore, fell on renewed selling as the PTCL-led rally faltered halfway in the absence of a follow-up support. This was followed by some negative news on the COT front including reports of show-cause notices issued to some erring brokers in line with the task force’s findings.
An erratic fluctuation of 500 points reflected the investors’ concern and their inability to hold long positions even on blue chip counters in the prevailing conditions.
In the absence of an official word on the issues, speculative forces pushed the index down whenever they liked after spreading negative rumours.
The initial run-up was triggered by the privatization-related news of the Pakistan State Oil (PSO) and the Pakistan Petroleum Limited (PPL) as investors covered positions in them and some blue chips.
Reports originating from the official sources said that the four companies have pre-qualified to bid for the controlling shares of the Pakistan Petroleum and 11 for the Pakistan State Oil (PSO). The perception that the sell-off of the controlling shares of both allowed the investors to take fresh positions at lower levels who hold potentials to appreciate, brokers said.
But what seemed to have reinforced the investor-perception of a robust future market was the advent of foreign funds including the Dubai-based short-covering in the PTCL; analysts said adding its prevailing low rates ensured fair capital gains in the weeks to come on the strength of sales alone.
The Etiolate, Dubai-based communication giant, who had purchased the controlling shares of the PTCL at $1.97 per or Rs117.00 per scrip was expected to be in the market to grab the floating stock after having deposited the final amount by next month, they said.
The future outlook appeared a bit encouraging despite the lingering badla issue and the cap on future exposure limits as investors could resume mopping operations on the strength of higher corporate dividend and per share earning.
Technically the market was still in an oversold position and any positive news from the SECP on the issues could give the needed boost to daily volumes, brokers said.
The AKD Securities and the Unilever Pakistan were among top gainers while the entire list was strewn by losses under the lead of oil shares, including the PPL, the OGDC, the PSO, the Pakistan Oilfields and the blue chips on other counters on persistent selling despite snap recovery at the end of week as the on-balance closing was on the lower side.
FORWARD COUNTER: Despite the weekend rally, all leading shares on the cleared list finished lower. Major loser among them being the PTCL, the PPL, the OGDC, the PSO, the Pakistan Oilfields, the National Bank and others on renewed selling in sympathy with their counterparts in ready section.
—Muhammad Aslam
