|
|
|
| July 03, 2006 | Monday | Jumadi-ul-Sani 6, 1427 |
Bourses close firm on weekend trading
THE stocks closed 2005-06 fiscal account on a firm note last week as the SECP’s warning of an action against the manipulators and a ban on short-selling on forward counter continued to inspire fresh covering purchases among major shares under the lead of oil, bank and others.
However, June 30, the last day of the fiscal, was most eventful in the history of the KSE as many new records, both in terms of index level and market capital were established at 12,336 points and Rs3,300 billion capital.
The index too, suffered the biggest single-session fall of 547 points and steadily recovered by above 400 points in successive sessions. The leading shares also touched their lowest and highest levels during the year that has just passed into the history.
Optimism over the new fiscal i.e., 2006-07 prevailed in the market aided by reports of higher crop earnings, the SECP’s move to eliminate speculative activities from share business, and amendments made in the Continuous Funding System (CFS) to increase the amount of funds.
The market, therefore, recovered from early lows on strong covering purchases at lower levels triggered by the SECP’s warning to manipulators seeking legal action against the erring ones. The investors’ response to official monitoring of the daily trading was bullish as they had covered their positions with the same speed as they had indulged in unloading, earlier in the week.
The market recovered well over 800 points and Rs220 billion from initial lows in the index and the capital, respectively. The amount was more than it had shed earlier in the week followed by an earlier panic-selling triggered by the Supreme Court verdict annulling the sale deal of Pakistan Steel.
The mid-week rebound reflects that there is nothing wrong with basic market fundamentals which are guided by higher corporate earnings, both final and interim for the fiscal ended June 30,2006. It also reflects investor-confidence in future share business on the perception of legal action against violators of the trading law. This will not allow the market crash as witnessed early in June or March last year.
Click to view the larger image
There are indications that the market will reopen its new fiscal year’s account on a bullish note on June 3. All pointers guide towards a promising opening under the lead of oil, bank, and cement shares which are expected to come out with higher profits and dividends.
Earlier, in the week, the index suffered massive decline in two sessions on panic-selling triggered by the annulment of the Pakistan Steel deal by the Apex Court as analysts feared the verdict would have a depressing impact on stock market and may slow down privatisation process of the state–owned units.
Although, the verdict was not against the government‘s privatisation policy as it questions the procedure adopted by relevant authorities to dispose off the entity which lacked transparency.
The month of June has terribly been bad for stock traders as the index suffered the biggest single-session fall of 547.93 on June 14, followed by 417.95 on June 13, on hasty selling by the big ones to pull the prices down and then buy it at the dips.
Leading base shares including the OGDC, the Pakistan Petroleum, the Pakistan Oilfields, the National Bank, the PTCL and the MCB led the early market decline falling sharply but failed to attract buyers as none was inclined to make fresh commitments in the developing situation on corporate front and recovered the initial losses after closing with upper locks after the SECP warning.
The negative fallout of the Apex Court verdict appears to be more psychological than pragmatic some analysts said adding that the speculative forces have made it look so at least for the near-term.
But some others said that the verdict would affect the future sale of some other units, including the PSO, the Pakistan Petroleum and others in more then one ways including lower valuations and active foreign participation. The sell-off is meant to attract foreign investment and latest technology to improve the operational efficiency of the units under sale, they added.
What worried some leading analysts was the fear that the sell-off of the PTCL, Habib Bank and the KESC may be challenged in the Apex Court which will certainly put further pressure on stock trading, they said.
It was a disturbing factor that both, leading investors and financial institutions were absent, perhaps because of the fiscal end and a price decline on this account. At the fag end of the fiscal, both institutional traders and leading brokerage houses covered their positions after the market was back on the rails.
FORWARD COUNTER: Leading shares on the cleared list showed sharp rallies and finished with fresh gains on strong mid-week short-covering. The OGDC, the National Bank, the Pakistan Petroleum, the Pakistan Oilfields, the MCB, the D.G. Khan Cement, the PTCL and some others were leading among them.—Mohammad Aslam
|
|
|
|
