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| March 26, 2007 | Monday | Rabi-ul-Awwal 6, 1428 |
Judicial crisis keeps investors subdued
SHARE market remained unsettled for the second week in a row as investors were not inclined to take new positions at the falling prices amid fears of fresh erosions in the backdrop of confusion over the judicial crisis.
Over the last week, price movements were highly erratic as investors could not adjust themselves to the rapidly changing background news both on political and judicial fronts.
In similar situations as the on prevailing now, investors usually withdraw to sidelines awaiting positive developments leading to boost share business. Stocks, therefore, turned highly volatile as investors played on both sides of the fence in response to negative and positive background news linked to the judicial crisis.
But larger fall was averted as financial institutions initiated strong rally after each fall and as a result, some of the leading shares managed to finish well above their early lows.
Extension of client-level netting (CLN) in future contracts by another month that is from May 1, was welcomed by brokers and evoked active buying on some of the counters at the lower levels.
The KSE 100-share index suffered a fresh fall of 79.05 points at 11,294.98 as compared to previous week's 11,374.03 points. The market capital also suffered decline of Rs33 billion at Rs3,070.17bn.
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But future market direction is unclear as investors are not inclined to go beyond manageable risk levels, although most of the blue chips are now in the buying range ensuring handsome capital gains, brokers said.
Some others hinted the market would continue to perform erratically until the judicial crisis was resolved and foreign investors were back in the arena.
“I think the market has already absorbed the negative impact of the judicial crisis and consolidation of the market will start possibly by next week”, analyst Asharf Zakria said. “But much would depend on the intensity of lawyers protests against the suspension of the Supreme Court chief justice,” he added.
The market's confusion was well reflected in the erratic movements of the KSE 100-share index, which earlier fell by 232.74 points or 2.05 per cent at 11,141.29 points after having touched the week's peak-level of 11,454 points.
All leading shares fell in unison, some of them to their lower locks, major losers among them being Pakistan Petroleum, PSO, OGDC and D.G. Khan Cement.
Some of the leading foreign investors are toeing the general line of perception about the future market direction and are keeping on sidelines, they said.
Opinions about the future market direction are divided. Some say it will stay until the current judicial impasse is over. Some others are of the opinion that there can be snap flutters here and there but the underlying sentiment will remain bearish.
Attempted rallies by some of the leading investors and financial institutions could push the market back on the rails temporarily. However, major breakthrough could only come if it was backed by sanity on the political front, they added.
The persistent decline in CFS rates and investment shows that investors are just marking time rather indulging in genuine trading activity, while day-traders and short-term dealers remained conspicuous by their absence.
FORWARD COUNTER: Speculative issues on the forward counter also followed the lead of their counterpart in the ready section but quoted mostly lower barring the MCB and the National Bank, which managed to finish higher on active support at the mid-week lower rates.—Muhammad Aslam
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