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| April 3, 2006 | Monday | Rabi-ul-Awwal 4, 1427 |
KSE-100 index passes through volatile trading week
THE stocks passed through an awfully violent week as investors were not inclined to take positions on any sector due to the fears associated with rollover positions on the forward counter. However, the clearing was smooth. A larger fall was averted despite the weakness of oil sector under the lead of the OGDC. The closing was a bit encouraging on the revival of demand at falling prices, late last week.
However, alternate bouts of buying and selling was the hallmark of trading as both foreign and local investors purchased and sold shares in quick succession and mostly on small profit and loss margins.
The Karachi stocks, after the prices turned highly volatile, managed to finish with an extended gain at the fag-end of the last week on active short-covering of the index by some heavy weights.
But the rally appeared to be inconclusive as foreign portfolio buying was not that aggressive as it was a couple of weeks back despite the fact that most leading oil and banks shares were well in line with the benchmark price on lower side.
After fluctuating either-way, the KSE 100-share index finally managed to finish with a fresh but modest gain of 26.32 points at 11,485.90 as compared to 11,459.58 a week back. This reflected the strength of base shares under the lead of the OGDC and some others. At one stage, it surpassed the previous peak level of 11,609 at 11,635.00 points.
The bulk of alternate bouts of buying and selling remained confined to leading oil, bank and cement shares. Yet, the insurance stakes stayed star performers owing to higher cash dividend plus bonus shares by all leading companies including the Adamjee Insurance, the Central Insurance, the EFU, the Century and some others.
There appeared to a grim psychological fight between the bulls and the bears beyond the index level of 11,000 points. The former was striving to push it up to the next target of 12,000, while the latter was inclined to play below 11,500 and 10,500 points.
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It was now a no-win situation, said a leading stock analyst adding that both have strong financial base and the entry of foreign funds in the arena could well prove a deciding factor.
The fact that each fall was followed by a smart rally reflected that there was nothing wrong with basic market fundamentals. Some technical factors, notably squaring up of positions in the matured March delivery proved an inhibiting factor.
The rollover week passed smoothly without an expected uproar indicating that the first trading week of the month could be more productive than of the last.
The stocks though recovered after suffering mid-week modest pruning at inflated levels but there appeared to be nothing wrong in the corporate news on which technical correction could feed on in subsequent sessions.
But active short-covering in the PTCL, the National Bank, the Pakistan Petroleum and the Pakistan Oil Fields by some foreign investors limited the market fall which should have been much higher.
I don’t see a major sell-off as quarterly results of some leading companies were overdue. These could attract a lot of fresh covering purchasing in the sessions to come, a leading stock analyst predicted.
But another analyst said that the selling which remained confined to the OGDC came from a foreign investor who had build-up a long position in it prior to last week. Late covering purchases allowed it end fully recovered.
However, it appeared to be a part of the portfolio adjustment rather than any other bad news from the oil sector which was expected to keep the entire market in a positive mood, he added.
The rollover amounts for maturing March contracts at Rs15.5 billion were on the lower side and may not be a bearish factor. Some leading punters have made it look so to set in profit-taking in an overbought market, said another leading equity analyst.
Most analysts believed that the market has already digested the negative fallout of external news, notably from Balochistan and tribal areas and as long as the oil shares remain an envy of foreign investors there was no reason to believe it to be bearish.
The recent oil discoveries and increase in oil and gas production in the existing fields has made oil sector a major speculative counter and foreign investors were expected to remain active players in them having positive impact on the broader market, they said.
FORWARD COUNTER: Barring the OGDC, which remained under pressure and fell from the week’s peak level, all other leading shares managed to finish with good gains. The leading gainers among them were Pakistan Petroleum, the PTCL, Lucky Cement, Fauji Fertiliser Bin Qasim, and some others amid active two-way trading.
—Muhammad Aslam
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