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| February 11, 2008 | Monday | Safar 03, 1429 |
Investors play safe as general elections approach
STOCKS last week failed to extend steadiness as investors were not inclined to take long positions even on the blue chip counters ahead of the general elections, but there was no large selling and only extreme gains were pared off at the inflated levels on some of the high-profile shares.
However, larger fall was averted as both bears and bulls maintained a status quo and did not indulge in large selling on any of the counters and mostly held on their positions as was reflected by falling volumes.
With the elections just a week away, investors played safe and did not indulge in speculative buying or bargain-hunting.
Keep-safe appeared to be the hallmark of the entire trading session as was reflected by the either-way fractional price changes and extremely narrow movements of the KSE 100-share index.
It mostly moved within a narrow range of about 60 points, showing modest fall and gain between 14,000 or 13,990 points and finally ended at 13,938.33, off 36.08 points. But, on the other hand, its junior partner the 30-share index gained 35.29 points at 16,701.32.
As leading investors failed to find cue to the keenly contested election results or the possible winner, no one was inclined to make bigger commitments even at the current lower levels because of risks involved in holding long positions in pre-election sessions.
“The entire trading appears to be a jobbing affair as investors bought at the fall and sold at the rise the same day, without carrying out the backlog”, said a leading broker. “Even some of them bailed themselves out the same day at a loss.”
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“The cold wave in the city also took a massive toll of the daily volume, which shrank to only 128 million shares as investors preferred to keep themselves warm indoors rather than indulging in business of shares”, a leading stock analyst Hasnain Asghar Ali said. The lowest daily figure is well below 100m shares.
The market’s real trend will be known after the elections and smooth transition of power to the wining party. If there are protests after the elections on the charges of rigging, the market could pass through further recession, most analysts believe.
Selective support was, however, witnessed on selected counters, which in turn had a stabilising impact on the market and forestalled panic buying from any quarter.
Bulk of the support was terribly cautious, reflecting worries about the general elections and law and order, mainly in the backdrop of occasional suicide attacks.
The heating up of political scenario as the deadline of Feb 18 is approaching, in a way also appears to be an inhibiting factor as no one is clear about precise outcome or the election results, analysts said.
“The off-repeated allegations of pre-election rigging, violence during polling and whether or not the contenders of power will accept the verdict of people, are some of the concerns of the investor having toll in the form of daily volumes”, they added. But as far as the corporate scenario is concerned, it is fairly encouraging both in terms of company earnings, payouts and exports despite a short cotton crop, which could keep the market in good shape, some others said.
However, despite more than one irritant, buyers are there in the market. Those who were not inclined to take the risk and wanted to play safe opted for the low-priced issues. But big ones are playing in the blue chips according to their whims.
The volatile performance of the market also reflects this phenomenon, indicating that no one is inclined to take risk at this stage at least until the elections.
Forward counter: Mixed trend was seen on the cleared list as investors played on both sides of the fence but mostly selling at the rise. The MCB, Pakistan Oilfields, and Pakistan Petroleum and some others managed to finish with modest to good gains but on the other hand Arif Habib Bank, Bank of Punjab and Fauji Feriliser Bin Qasim and some others tended lower on profit-selling.—Muhammad Aslam
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