June 02, 2008	Monday	Jamadi-ul-Awwal 27, 1429

THE share market witnessed a major change in the investors’ strategy during the last two sessions of the week as institutional-led rescue operation on selected counters raised hopes that the worst may now be over and the next week could witness the return of the bulls at the current lows.

It was, however, another terribly disturbing week for the Pakistan’s premier bourse as the market crash surpassed all previous records as political uncertainty intensified each session amid rumours of the president’s resignation, denied by the presidency. But what seems to have dealt a severe blow on the market was the absence of support from any quarter at the attractively lower levels and sellers dominating the trading.

The market took a brief breather after the central bank moved in to arrest the market fall after deferring their 50 per cent exposure limit for one year in an effort to end the prevailing liquidity crunch and higher CFS rates. The market did react positively to the step but the recovery proved short-lived as speculators again tightened grip on the market.

Over the week, the KSE 100-share index and the market capital significantly added to previous losses, off by 881.23 points and Rs258bn at 12,130.51 and Rs3,746.20bn respectively. The free float 30-share index suffered larger fall of 1,176.61 points at 14,097.98 on active selling.

“The intriguing silence of the leading financial institutions, which come to the help of a falling market in abnormal situations as the prevailing one, seems to have further demoralised the investors’ morale”, analyst Hasnain Asghar Ali said.

Whether it was a calculated market rout or the market has slipped into the hands of speculative forces is not clear, but the massive price erosions and fall of index reflects that rumours following in quick succession did not allow to have an objective view of the developing situation on the political front, he said.

After mid-week, the KSE 100-share index recovered from the initial lows but after having been massively mauled as some of the leading financial institutions moved in and launched a rescue operation unlocking many lower locks on the blue chips counters witnessed during the last couple of sessions.

“But the recovery is not based on positive news and appears to be inspired one as there is no change in the political scenario or a terrible lull”, a leading analyst Faisal A. Rajabli said. “The market needs sanity on the political front and allaying of fears about new taxes in the budget”, he added.

Market sources said a delegation of the KSE met Asif Zardari and Federal Finance Minister Naveed Qamar and apprised them about the investors’ problems in relation to the current market decline, but, they said, there was no positive response with regard to immediate corrective steps. However, they promised to look into it after the budget.

After having breached through another barrier of 12,000, third in a row at 11,698.98 as investors continued to unload their long positions in the backdrop of rumours of president’s resignation following in quick succession, the index recouped bulk of the initial losses. But its junior partners fell further at 14,097.38 points.

“The market is still in the tight grip of speculative forces which are out to undo just within no time what the capital market had attained during the last couple of years”, analyst Ahsan Mehanti said. “It may not have political under current though some think it may have,” he added.

“What seems to have aggravated the situation is the official apathy as there is no word from them allaying investors’ fears about the capital gains tax and rumours of imposition of other taxes in the budget”, he said.

“The loss of $22 billion in the market capital during the last couple of weeks is a massive figure, a half of which is billed to the credit of the government and the other half is shared by the investors and the brokerage houses”, analyst Ashraf Zakria said and added that the “market has the capacity and the will to recoup it in normal trading conditions backed by official corrective steps”.

“The current sell off has surpassed all previous market crashes including those of March 2005 and June 2,007 in terms of erosion of the market capital”, analysts Faisal A. Rajabali said. “It has lost about $22 billion from the market capital since early May, the losses in previous market plunges being $15 and $13 billion respectively”.

Forward counter: Most of the leading shares on this counter remained under pressure throughout the last week under the lead of bank shares, notably MCB, National Bank, Bank of Punjab, and leading oil shares, including Pakistan Petroleum, OGDC and Pakistan Oilfields and some other blue chips such as Engro Chemical, Arif Habib Securities, JS & Co and PTCL.

But toward the close of the week, leading cement shares came in for active support at the lower levels and showed modest rallies under the lead of D.G. Khan and Lucky Cement and some others.

—Muhammad Aslam.