November 20, 2006	Monday	Shawwal 27, 1427

PRICE movements at the Karachi Stock Exchange were highly erratic last week as investors played on both sides of the fence without taking long positions even on high-profile shares.

Although the SECP has planned to implement the new risk management rules in phases beginning from December 4, 2006 to December 2007 to provide relief to the brokerage houses. However, reservations over conversion of badla into the Continuous Financing System (CFS) triggered a lot of selling.

The MMA threat to resign from the Lower House in protest against the passing of Women Protection Bill along with further political polarization which may lead to a major fight among the contenders of power were two major factors pulling the strings of fear among the analysts.

Therefore, the market failed in establishing a definite price pattern under the cross-current of a judicious blend of negative and positive news in the absence of a strong support from the institutional traders and foreign buyers. The KSE 100-share index ended modestly low by 33.58 points - from 10,739,45 to 10,705.87.

The market was moving one step forward and two steps backward in the absence of a follow-up support. None was inclined to hold long positions even for a day. Selling at the rise and buying at the dips appeared as a key activity throughout the week.

Floor brokers said that the investors’ worries of the new risk management rules were there but what ailed the market was the lack of support from other quarters, including financial institutions for no apparent reasons - bearish or otherwise.

A considerable fall in daily volumes and the highly erratic price movements even on blue chip counters reflected that the investors were awaiting some fresh stimulants to neutralise any negative fallout of the withheld SECP forensic probe report on last year’s market crash, they added.

The future direction of the market will be clear after December 4, when the new risk management rules would become effective by replacing the infamous badla with the massively enhanced CFS at Rs55 billion, said a leading stock analyst Faisal A. Rajabali.

The market, however, did not give any immediate - positive or negative - reaction to the passing of Women Protection Bill. Although some analysts did express their apprehensions that the political scenario was liable to heat up later on.

After turning into highly erratic movements under the cross-current of conflicting rumours on a delayed SECP forensic probe report, the KSE 100-share index managed to finish with a modest gain close to its higher level of 11,000 points.

But an uncertainty about the probe report continues to destabilise the market fuelling speculation that some big names may had been involved in manipulating the prices which caused the stock market to crash in March 2005.

The intensity of the lack of confidence may well be had from the fact that the investors ignored positive news, notably the government indemnity provided to the OGDC to issue its proposed GDR shares on the London Stock Market, and the Excise Duty relief to the Pakistan Petroleum - which otherwise should have been morale booster in a normal market.

But both reacted favourably to the news and rose from their previous lows on active short-covering, enabling the index to resist fresh decline being major weight-holders in it.

What seemed to have created panic-like conditions in a hereto robust market was the indefinite delay in the release of the reports, said a leading analyst Hasnain Asghar Ali adding that speculative forces may rule supreme in the intervening period which may lead market to another crisis or a possible plunge.

That was perhaps why no one was inclined to go beyond certain pre-determined buying limit and played safe - taking profits at each rise and selling at the dips.

Most leading scrips, notably in the bank and oil sectors attained an attractive level and ensure massive capital gains, another analyst Ashan Mehanti said furthering that but only those would venture forth who have courage and financial resources to take the risks.

Although, losers again dominated the list of some leading shares, including the MNCs managed to finish higher under the lead of Shell Gas, Lakson Tobacco, Bhanero Textiles, the EFU Life, Central Insurance, Atlas Honda, National Bank, Arif Habib Securities and Colgate Pakistan.

The Pakistani refinery, Berger Paints, Wyeth Pakistan, Nestle Pakistan, Jahangir Siddiqui & Co, and Rafhan Maize fell on selling at higher levels.

FORWARD COUNTER: Barring the OGDC, the Pakistan Petroleum, the MCB and some others which remained under pressure. The National Bank, PICIC and some others managed to finish higher on active support.—Muhammad Aslam