April 28, 2008	Monday	Rabi-us-Sani 21, 1429

A STRONG rally at the fag end of the last week again put the market back on the rails allaying fears of extended sell-off by the weak holders and speculative traders.

Higher interim corporate profits by leading companies, mainly the Mansha group under the lead of MCB, were said to be the inspiring factor behind the snap weekend rally. Most analysts believe the market could resume its upward movement by next week as investors had adjusted their portfolios to resume fresh covering purchase after trading resumes next week.

Earlier in the week, the widely speculated technical correction crept into the share market but it was progressive and did not come with a bang triggering crash.

Although the KSE 100-share index shed off much of its extra weight, about 200 points at 15,434.73, net fall being over the week 241.60 points.

However, it set its new career-best levels so far during the week, the highest being 15,740. It was heading to its new target of 16,000 points but was intercepted by way of technical correction.

The market remained a victim of rumours coming in spate about taxes in the new national budget due in the first week of June and never allowed it to respond to higher interim corporate earnings by most of the companies.

Apart from higher leveraged positions in the rollover week in the April settlements, which destabilised the market, rumours including the withdrawal of exemption on the Capital Gain and Capital Value taxes in the next budget caused most of the damage to the rising market, analysts said.

They said the market had already passed through a technical correction and there was no reason to believe that the weekend bearishness could be extended when the market reopened next week. The KSE 100-share index on Monday briefly crossed the barrier of 17,700 at 17,740 points but failed to sustain it and finished with a modest decline the same day amid profit-selling on the blue chip counters.

The selling was partly attributed to a number of rumours, notably exposure problems of a leading broker and brief suspension of trading owing to technical fault in the IT section.

“The talk of a massive correction in an overbought market finally manifested itself though in phases as investors took a bearish view of the market at least for the near-term”, said a leading analyst Faisal A. Rajabli” but investors had developed a new mode of correction, known as self-correction mechanism during intra-day trading, which rules out the possibility of a major fall”.

He said some investors push prices of choice scrips lower and then buy to take profits at the rise by way of correction as was indicated by highly erratic price movements each day.

The interesting feature of the session was that trading had to be suspended for about 20 minutes owing to technical fault in the IT section, but the loss of time was compensated after extending the official closing time, dealers said.

“The fact that the index sustained the 15,000 level for the last couple of weeks shows that investors are not inclined to loosen their grip over the price line at least for the near-term”, said a leading equity analyst Ashraf Zakria adding the “next target of 16,000 or above may now not be an elusive goal”.

He said when buyers outnumber sellers; there was no reason to believe that the market would bow down on stray selling that too from small investors.

“Highly erratic price movements on the blue chips counters reflect that investors are in the process of changing portfolios apparently from the high-profile issues to the low-priced ones having a potential of capital gains”, analyst Ahsan Mehanti thinks.

He said lower locks were applied to some leading shares including Adamjee Insurance on conflicting reports of earnings and claims on damages caused on Dec 27 after the assassination of Benazir Bhutto, but its management subsequently reported higher interim profits.

Forward counters: Speculative issues on the forward counter also showed modest rallies at the fag-end of the week but their on-balance closing was on the downside owing to sharp fall recorded earlier in the week.

But Nishat Mills, D.G Khan, Bank of Punjab, Lucky Cement, JS Bank and Engro Chemical managed to finish well above their weekly lows on late covering purchases at the lower levels. The notable feature was that April settlements were rung off the board and newcomer May contracts assumed the role of ruling deliveries.

—Muhammad Aslam