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| May 21, 2007 | Monday | Jamadi-ul-Awwal 04, 1428 |
Foreign investors resume buying selected stocks
A STRONG weekend rally enabled the stock market last week to finish with clipped losses signaling that the worst may now be over and there could be some pleasant surprises in the next trading week.
Although low-priced issues initiated the recovery, indicating a major shift in investors’ perceptions, active short-covering in oil, bank and cement shares also played an import role in putting the market back on the rails. The notable feature of the week was that foreign investors, who had withdrawn to sidelines followed by city violence, resumed their covering purchases on selected counters including oil scrip.
Stocks, therefore, survived the last Saturday’s city carnage owing to its inherent strength but some liquidity-related worries did take their toll on some counters.
But larger fall or panic selling from any quarter was averted thanks to presence of strong institutional support in the absence of foreign investors who stayed on the sidelines apparently awaiting return of sanity to the city.
After moving either-way, throughout last week, the KSE 100-share index finally finished with a decline of 27.2 points at 12,340.42 as compared to 12,367.62 a week earlier. The KSE 30-share index fell by 76 points at 15,287.23.
It was a week of fluctuating fortunes for both bulls and bears as investors played on both sides of fence and did not take long positions apparently awaiting the dust to settle down on the law and order front.
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Investors claim that as the existing CFS ceiling of Rs55 billion has already touched, the market needs more funds to keep up the rising tempo, and suggest an increase between Rs65 and 70 billion.
Official say the prevailing CFS rates on the money markets are well below the upper limit of 18 per cent rates, which reflects there was no pressure on money supply.
However, difference of opinion and perception on the issue did take its toll some time in low volume and some time in active selling before financial institutions intervened to restore sanity to stock trading.
Leading shares initiated the recovery and came in for active follow-up support with normalcy returning to the city after last Saturday’s violence.
The market’s positive mood was also well reflected in the KSE 100-share index, which at one stage hit the week’s peak level at 12,499.13 but late selling triggered by reports of a bomb blast in Peshawar, killing over 25 people, pushed it down. Incidentally, the market did not plunge as it does in similar conditions as the prevailing one in the backdrop of city killing as financial institutions launched a big rescue operation to protect the savings of small and genuine investors.
However, investors will take couple of days more to be fully prepared to make fresh commitments apparently anticipating resumption of covering operations at lower levels by foreign investors.
“Unpredictable is the behaviour of the KSE bourse having an enormous capacity to absorb massive shocks”, a leading stock analyst Ashraf Zakaria said. “Sometimes it gives in to stray negative news and sometime it ignores the most devastating ones”, he said.
Although institutional traders played a big role in keeping the market in a positive mood, some of the bargain-hunters followed them saving the market from a possible crash.
Meanwhile, NIB Bank, in which a Singapore Bank has a big stake, announced that it had purchased controlling shares of the Pakistan Industrial Credit & Investment Corporation (PICIC) at the rate of Rs78 per shares.
Forward Counter: Speculative issues on the forward counter on the other hand did not toe the line of their counterparts in the ready section and modestly rose under the lead of OGDC, Nishat Mills, Lucky Cement, Bank Alfalah, MCB, and some others.
—Muhammad Aslam
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