|
|
|
| October 24, 2005 | Monday | Ramzan 19, 1426 |
Uncertain market trend keeps stock investors at bay
AFTER hitting the five-month high at 9,012 points, the KSE 100-share index last week had to pass through half a dozen low barriers as leading operators, including financial traders left the arena due to panic selling and free-for-all on the overvalued counters, notably in bank and oil shares.
The market was flooded with sell-stops but not many willing buyers were present even at an attractively low level. None was inclined to take the risks amid conflicting rumours of the future market trend.
How long the widely billed technical correction or the market retreat will stay was not clear but indications based on the bear mood ruled that the worst was yet to come in case leading bulls kept to the sidelines.
Apart from technical corrections, another destabilizing factor was the proposal to cut the excise duty on diesel from 10 to five per cent and pass on the relief to the general consumer. This triggered sell-stops in oil shares which in turn dragged the entire market down.
Despite an early fine start, the stocks were massively battered last week as bears and bulls fought grimly to outwit each other. However, both operated in a no-win situation with the negative fallout not easy for many to digest.
After crossing the 9,112 points barrier, the KSE 100-share index hastily retreated as bears managed to tilt the balance in their favour amid nervous selling in bank and oil shares. Finally official intervention in the form of lower locks to forestall fresh decline was sought.
It finally finished around 8289.81 points, off seven per cent or 574.06 points as compared to 8,863.87 a week earlier, chipping away Rs157 billion from the market capital at Rs2,369.590 billion. The PSO, the Pakistan Oilfields, the Pakistan Petroleum, the OGDC followed by the National Bank, the MCB, and the Bank of Punjab, who earlier had propelled the market to new highs, pushed it down on heavy profit-selling at inflated levels.
Both tried to tilt the price balance in their favour after indulging in massive buying and selling but finally bears appeared gaining an upper hand.
Click to view the larger image
The brawl was still on and nobody could predict whether the market could survive the negative fallout of the infighting between the big ones. In such conditions, it was better to ride the bandwagon to swim and sink in the tides with an eye on financial position and capacity to absorb undue shocks.
In the process, the KSE 100-share index witnessed the breach of three consecutive barriers over the week, sending panic shocks among the day traders and small investors.
The market remained in the grip of rumour-mongers who continued to circulate conflicting statements, sometimes to induce selling or to evoke covering purchases.
The massive volatility worked as a double-edged weapon against the underlying sentiment by not allowing investors to plan even on short-term basis, said a leading analyst.
Stocks moved on a slippery path amid nervous selling in some leading base shares amid negative reports of interim corporate results announced by few top companies followed by panic liquidation from all and sundry.
The market appeared in the tight grip of speculators as only big ones had resources and guts to cause such massive either-way movements of the index creating panic-like conditions at a time when Islamabad was seized with post-quake rehabilitation process.
The SECP in the given situation should intervene to restore the sanity before it was too late some leading investors said adding, developing situation was reminiscent of the last March crash with the index at 10,300 points and now at 9,000.
A section of analysts said that the market had risen by 2,000 points during the last couple of months and needed correction. Where would be the end was not clear as the big operators held the key. Lower-locks in bank and oil shares reflected that the market retreat had just begun.
The KSE 100-share index lost most of the gains and was marked sharply lower. All leading base shares, notably the PSO, the Pakistan Oilfields, the PTCL, the OGDC and some others remained under pressure and finished around their lower limits.
It was not difficult to pull the index down by 6.5 per cent just in a week, said a leading analyst adding, pull half a dozen leading base shares down by few bucks individually and watch index tuned.
However, the massive either-way volatility scared the genuine and small investors who were unable to react to panic-like situation and thus caught in-between.
Erratic index movements reflected a straight fight between the bulls and the bears, analysts said adding, former were out to see it beyond the 9,000 points while the latter wanted it within sustainable level.
Speculation continued as none among them was a loser. They with their weak links should leave the arena and keep away from bull fight until sanity returned to the trade, brokers said.
Losers were led by the Pakistan Oilfields and Rafhan Maize, followed by the Attock Refinery, the Millat Tractors, the MCB, the Bank of Punjab, the National Bank, the Treet Corporation, the Shell Pakistan, and the PSO.
Some prominent gainers included the Nestle Pakistan, the United Sugar, the Shezan International, the Arif Habib Securities, the Attock Petroleum, the Aventis, the Abbott Lab, the Wyeth Pakistan and the Siemens Pakistan.
FORWARD COUNTER: Speculative issues on the cleared list remained under persistent unloading at highly inflated levels and fell like the house of cards when bears moved in. The PSO, the Pakistan Petroleum, the OGDC, the Pakistan Oilfields, the National Bank, the MCB, the Bank of Punjab, the PTCL and many others tended sharply lower amid large daily volumes. Others followed them but fell modestly.—Muhammad Aslam
|
|
|
|
