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| March 17, 2008 | Monday | Rabi-ul-Awwal 8, 1429 |
Investors wait for power transfer
SELECTIVE support last week prominently figured on the high-growth shares apparently to realise quick gains but instances of long-term investment were not many as investors were not inclined to go all out until the new political set up is in place. The next week could be crucial for the future direction of the market as the new assembly would be in session and signals from its proceedings were expected to be readily picked up by the prospective investors.
How to react to the new political setup and its economic and financial policies would have positive or negative bearing on the capital market, analysts said.
The market, therefore, failed to establish any definite price pattern as investors were not inclined to make long-term commitments even on the blue chip counters till the new political setup was in place.
After having fluctuated either-way between the barrier of 15,000 plus and below it, the KSE 100-share index finally ended at 15,087.47 points, fractionally higher by 2.39 points. But the finish was well below the week’s highest at 15,171.42.
The mid-week witnessed the return of some foreign investors on the oil and banking sectors at the lower levels but later they too followed the general market perception owing to political uncertainty amid conflicting news about the possible standoff between the victors and the presidency on some core issues.
With the dividend news from the leading companies being one of the major stimulants during the last two months, the market’s sustained run-up have dried up and investors are looking for smooth transition of power and return of foreign investors, which could boost stock trading, analyst predict.
The volatility of the KSE 100-share index, which hit the high and low of the week at 15,171 and 14,912.78 indicates that investors are still in two minds about smooth sailing on the political front.
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The future direction of the market will be guided by events in Islamabad and there may not be a major breakthrough until process of transition is completed, they said.
Leading base shares, mainly MCB, National Bank, PTCL, OGDC, Engro Chemical and some others came in for active support and led the market advance.
Selective support on the blue chip counters figured prominently as the market made decisive breakthrough as investors resumed their normal activity though played on both sides of the fence.
Although NA session has been called on March 17, conflicting news about the rigid positions taken by both the political parties and the presidency on some issues including restoration of the apex court judges continue to worry investors, floor brokers said.
“There may be a long legal battle on the issue but it is not a no-win situation and the truth will finally prevail,” they said adding “the speculation about a major standoff on some of the issues may keep the buying interest at a low key”.
The market has given a volatile performance during the week, but the next week could be crucial for its future direction based on the loud whispering from the assembly session, some others said.
However, foreign investors are expected to wait for further developments on the political front before resuming their normal trading activity mostly on the ‘safe havens’ for the time being.
Despite higher exports, analysts were worried over the steep fall of 95 per cent in the interim profits of the cement sector, at only Rs65 million as compared to Rs1.347 billion during the same period a year ago.
There are some exceptions too as some of the leading among them, notably Lucky Cement and D.G. Khan Cement maintained their winning stream but based on the entire sector the earnings are terribly low and could have negative fallout on the other counters, they fear.
Forward counter: Price movements on this counter was highly erratic as investors played on both sides of the fence, leading losers being MCB, National Bank, Bank of Punjab and some others. But on the other hand Engro Chemical, PSO, Bank Alfalah, Lucky and D. G. Khan cement and some other managed to finish higher.
—Muhammad Aslam
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