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| November 26, 2007 | Monday | Ziqa’ad 15, 1428 |
Petroleum shares lead market advance
THE share market remained in a bullish frame of mind throughout last week as positive news, both on the legal and political fronts, did not allow investors to take even a technical breather as no one among them was inclined to miss the capital gain amid price flare-up.
Oil shares, led the market advance and sustained it throughout the previous week partly owing to removal of price ceiling of $50 and partly to rebound staged by the international prices.
However, foreign investors remained conspicuous by their absence and may take some more weeks to be back in the market and join the main stream.
Both KSE 100-share and 30-share indexes recovered most of the losses suffered during the last couple of weeks and were quoted higher by well over 650.58 points and 992 points, adding Rs137 billion to the market capital.
What seems to have restored investors’ confidence was dismissal of petitions challenging President Pervez Musharraf’s eligibility to seek reelection for the second term in uniform, which cleared his way for the second term without uniform.
President Bush’s reiteration of his support for President Musharraf and endorsement of his political policies leading to a democratic rule in Pakistan was another positive development, which came at a crucial time.
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It is believed that foreign investors, who have withdrawn to sidelines after the imposition of state of emergency, may take some more time to return to the market, possibly after the general elections.
However, it was a matter of satisfaction that foreign investment outflow in the share business was modest at about $135 million out of the total of well over $1 billion, reflecting that they have confidence in the local bourse and held on to their positions.
“I don’t attribute the snap rally to the revival of foreign demands in the leading oil shares at the currently lower levels, but price flare-up in this sector suggests this”, said an analyst. “Trading in the next couple of sessions will show whether or not the support is genuine or inspired,” he added.
The removal of $50 per barrel price ceiling on oil exploration companies owing to steep increase in international crude rates during the recent weeks to well over $90 was the chief stimulating factor behind the rally in the oil sector, analyst Ahsan Mehanti said adding “dismissal of petitions against the presidential election by the apex court was another supporting factor”.
Some others fear negative fallout of president’s refusal to lift emergency prior to general elections as suggested by the US diplomat during his recent visit leading to aid-linked financial problems.
“Investors should not read too much in the president’s current stance on the emergency”, they said and added “it will be lifted on his own timings”.
But some independent observers of the developing political situation say all is not well on the investment front, notably in the share business irrespective of some positive developments in relation to continuity of the existing economic policies.
The short-covering was largely selective and remained confined to some risk-free shares indicating that no one was inclined to go beyond the safe havens because of the tense situation on the political front and the absence of market trend-setters, they added.
The fact that the gainers maintained a fair lead over the losers indicates the support largely originated from selected counters having the holding capacity for a longer period.
FORWARD COUNTER: Oil shares led the list of actives and higher gainers under the lead of Pakistan Oilfields, PSO, Shell Pakistan, OGDC, MCB, National Bank, Lucky Cement and some others on active support at lower levels.—Muhammad Aslam
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